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Obama tries to rescue fiscal talks for post-Christmas deal

Source : BUSINESS_STANDARD
Last Updated: Sat, Dec 22, 2012 18:50 hrs

The White House yesterday tried to rescue stalled talks on a fiscal crisis after a Republican plan imploded in Congress, but there was little headway as lawmakers and President Barack Obama abandoned Washington for Christmas.

In remarks before flying to Hawaii for a break, Obama suggested reaching a short-term deal on taxes and extending unemployment insurance to avoid the worst effects of the “fiscal cliff” on ordinary Americans at the start of the New Year. “We’ve only got 10 days to do it. So, I hope every member of Congress is thinking about that. Nobody can get 100 per cent of what they want,” said Obama. Obama said he wanted to sign legislation extending Bush-era tax cuts for 98 per cent of Americans in the coming days.

The Democrat appeared to be offering bickering lawmakers a way to fix the most pressing challenge - tax cuts that expire soon - while leaving thorny topics such as automatic spending cuts or extending the debt ceiling for later.

Obama called on lawmakers to use the holiday break to cool off frayed nerves, “drink some eggnog, have some Christmas cookies, sing some Christmas carols,” and come back next week ready to make a deal.

Negotiations were thrown into disarray on Thursday when House of Representatives Speaker John Boehner failed to convince his fellow Republicans to accept tax cuts for even the wealthiest of Americans as part of a possible agreement with Obama.

“How we get there, God only knows,” Boehner told reporters on Friday when asked about a possible comprehensive fiscal cliff solution.

If there is no agreement, taxes would go up on all Americans and hundreds of billions of dollars in automatic government spending cuts would kick in next month — actions that could plunge the US economy back into recession. Obama spoke to Boehner yesterday and held a face-to-face White House meeting with the top Democrat in Congress, Senate Majority Leader Harry Reid.

Before his defeat in Congress, Boehner had extracted a compromise from Obama to raise taxes on Americans making more than $400,000 a year, instead of the president’s preference of those with income of $250,000 a year. But with talks stalled on the level of spending cuts to which Obama would agree, Boehner attempted a backup plan to raise taxes only on those making more than $1 million a year — amounting to just 0.18 per cent of Americans.

Bad defeat for Boehner
Boehner’s reverse in the House was worse than first thought. A key Republican lawmaker said Boehner scrapped the vote when he realised that between 40 and 50 of the 241 Republicans in the House would not back him.

Obama and his fellow Democrats in Congress are insisting that the wealthiest Americans pay more in taxes in order to help reduce federal budget deficits and avoid deep spending cuts. Republicans control the House and Democrats control the Senate.



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