Obama insists on tax hike for rich as part of fiscal deal

Fri Nov 9, 2012 6:30pm EST
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By Mark Felsenthal and David Lawder

WASHINGTON (Reuters) - President Barack Obama said on Friday he was prepared to compromise with Republicans to avert a looming U.S. fiscal calamity, but insisted a tax increase for the rich must be part of any bargain.

Obama, who was re-elected on Tuesday, reminded Republicans that his approach to avoiding steep tax hikes and spending cuts due in January, which could trigger another recession, had just won the backing of Americans at the polls. His spokesman said he would veto any deal that did not include an extra contribution from the wealthiest.

Obama invited congressional leaders to the White House next Friday to discuss the issue, the most pressing challenge as the president prepares to starts his second term in office. He will also hold a news conference on Wednesday.

John Boehner, the Republican speaker of the House of Representatives, repeated his party's commitment not to raise anyone's tax rates as part of a deal to address the crisis.

He too claimed a mandate from the elections, in which voters gave Republicans continued control of the House.

The statements showed the two men, who have been divided on the issue for two years, were still far apart, leaving doubts over whether the "fiscal cliff" could be averted. Congress is expected to address it when it reconvenes next week for a post-election lame-duck session.

"Boehner and Obama are using softer tones, but the substance of what they're saying hasn't changed very much, and it doesn't look like there's been any movement from the last time they had a budget discussion," said Stan Collender, a former congressional budget aide.

The automatic across-the-board budget cuts due in January were scheduled in August 2011 as part of a deal to raise the U.S. debt ceiling. Aimed at cutting the federal budget deficit, the planned measures could take an estimated $600 billion out of the economy and severely hinder economic growth.   Continued...

U.S. President Barack Obama holds up a signature pen as he delivers a statement on the U.S. "fiscal cliff" in the East Room of the White House in Washington, November 9, 2012. REUTERS/Kevin Lamarque