Obama ‘willing to compromise’ on ‘tough spending cuts’
US President Barack Obama said Monday he was ready to compromise “a little bit” to head off a tax and austerity crisis, but warned he would not budge on making the rich pay more.
Obama took his campaign to hike rates on the wealthy to a factory floor in Michigan, a day after he met House Speaker John Boehner, his top Republican foe on the “fiscal cliff” showdown for secret White House talks.
Unless Obama and Boehner strike a deal to head off $500 billion dollars in tax hikes and savage spending cuts by January 1, all Americans will face higher taxes next year and experts fear the US economy will dip into recession.
A temporary cut to payroll taxes and unemployment benefits will expire at the same time, and Obama is also calling on Congress to raise the government’s borrowing limit from its ceiling of $16.4 trillion which will be hit shortly.
Obama wants to extend tax cuts dating from the George W. Bush era to be extended for 98 percent of Americans, but to let rates rise on individuals earning more than $200,000 a year and families pulling in $250,0000.
Republicans are demanding cuts to social programs in return.
“I have said I will work with Republicans on a plan on economic growth, job creation and reducing our deficits that has some compromises between Republicans and Democrats,” Obama said.
“I am willing to compromise a little bit,” he said, but added any long-term solution to America’s deficit problem must not forestall investment in roads, infrastructure and education that will boost the economy’s competitiveness.
“We make some tough spending cuts on some things that we don’t need and then we ask the wealthiest Americans to pay a slightly higher tax rate.”
“That’s a principle I won’t compromise on … because I am not going to have a situation where the wealthiest among us, including folks like me get to keep all our tax breaks.”
The White House maintained a news blackout on talks with Boehner on averting the “fiscal cliff,” sticking to Sunday’s statement from both sides that “lines of communication remain open.”
This week is seen as crucial in the wrangle, as time is running out for a deal to be sealed and packaged into bills that Congress could pass before Christmas.
Many observers believe that even if there is a pact, lawmakers could remain at work right up until the holiday, and even be called back to Washington between Christmas and New Year.
Obama’s trip to a Daimler truck engine plant was his latest foray outside Washington designed to build pressure on Republicans in Congress to back down on the tax issue.
Last week he made similar arguments in the kitchen of a home in the Washington suburbs, and he has also been huddling with top CEOs.
He was in friendly territory in Michigan, a state that voted for him in the election on November 6 and as he argued that his auto bailout in 2009 had saved thousands of jobs and rescued an iconic US industry.
Obama made his first offer to avert the fiscal cliff by offering $1.6 trillion in new tax revenues over the next decade, mainly from higher tax rates on the wealthiest two percent of Americans.
In their counter-offer, Republicans included a plan for $800 billion in tax revenue raised through closing loopholes and ending some deductions.
Obama argues that only by raising rates will enough revenue be raised to put the United States on a path to genuine deficit reduction.