Obama to join "fiscal cliff" battle as showdown looms
By Mark Felsenthal | November 10, 2012 4:21 AM EST
President Barack Obama will join the battle over the U.S. "fiscal cliff" on Friday for the first time since voters gave him a second term, setting the stage for a showdown with congressional Republicans over sharp tax hikes and spending cuts slated to take effect early next year.
Obama is to make a statement from the East Room of the White House at 1:05 p.m. EST (1805 GMT). His opening move in what is expected to be a tense negotiation to avert the so-called "fiscal cliff" was telegraphed Thursday by a top adviser, David Plouffe, who claimed a mandate from Tuesday's election victory to raise taxes on the wealthy.
That set up a clash with the Republican-controlled House of Representatives, whose leader, Speaker John Boehner, called on Obama to play a more active role to avoid a fiscal crisis.
Boehner urged the president - who no longer needs to worry about re-election - to take the lead in negotiations over economic measures that are likely to be unpopular with voters.
"This is an opportunity for the president to lead. This is his moment to engage the Congress and work towards a solution that can pass both chambers," Boehner told a news conference.
The Republican reiterated his opposition to any increase in tax rates but held out hope for an agreement with Obama and congressional Democrats over closing loopholes in the tax code.
"You can put revenue on the table through fixing our broken tax system, getting our economy going again and getting more Americans back to work," Boehner said.
The "fiscal cliff" of steep government spending cuts and tax increases due to be implemented under existing law in early 2013 may cut the federal budget deficit, but economists warn it also could tip the economy back into recession.
While disagreeing on immediate measures to avert the looming fiscal crisis, Obama and Republicans may find common ground in calls for enactment over the next six months of a larger package of deficit reduction measures, including a rewrite of U.S. tax laws.
The president called for negotiations on such a "grand bargain" during his campaign.
Obama, who defeated Republican challenger Mitt Romney in a race in which the two candidates offered different visions for spurring the sluggish economy, is not expected to put forward a new or specific plan.
Instead, he is more likely to urge Congress to tackle the fiscal cliff during its post-election session that begins next week.
The president's advisers told reporters on Thursday that dealing with the fiscal cliff would be an immediate priority. The administration sees Obama's re-election as an endorsement of his position that affluent Americans should see their taxes rise, they said.
"One of the messages that was sent by the American people throughout this campaign is ... (they) clearly chose the president's view of making sure that the wealthiest Americans are asked to do a little bit more in the context of reducing our deficit in a balanced way," senior White House adviser David Plouffe said.
The non-partisan Congressional Budget Office reiterated on Thursday that if left unaddressed, the abrupt fiscal tightening would knock the economy back into recession, with unemployment rates soaring back to about 9 percent.
But it also warned of a crisis ahead if the United States does not stem the growth of its exploding deficit.
Partisan squabbling over the budget crisis will also harm the U.S. economy, according to a strong majority of economists polled by Reuters after Tuesday's presidential election.
While most said political leaders will avert the "fiscal cliff by January 1," respondents warned that confidence in the economy will be hit hard if talks descend into a major fight.
Forty-two out of 50 economists described as "high" the risk that fraught budget talks will harm investor and consumer confidence, while the remaining eight were "neutral." But some of the damage has already been done.
"You've seen signs of that in capital goods spending - orders and shipments - and it's very possible that we'll see hiring hit towards the end of the year, or early next year, depending on how the negotiations turn out," he said.
(Reporting by Mark Felsenthal, David Lawder, Kim Dixon and Rachelle Younglai; Writing by Alistair Bell; Editing by Fred Barbash)
Most Popular Slideshows
- Flight MH17 Attack: Russians Claim 'Putin A Terrorist,' Memorial at Dutch Embassy Overflows [PHOTOS]
- Typhoon Rammasun Claims 18 Lives in China, Incurs $4.32B Losses (PHOTOS)
- Ellen DeGeneres Caught Cheating with Mutual Friend Before Portia de Rossi’s Rehab – Reports [PHOTOS]
- Malaysia Airlines MH17: Vital Black Boxes Finally Land in Hands of Malaysian Authorities, Rebels Announce Ceasefire (PHOTOS/VIDEOS)
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- Samsung Galaxy Note 4 Apps Leak Online, Five Fresh Features to Expect from the Android Smartphone
- Moto 360 Price Speculations, Key Features, Strategic Release Date, Design: A Watch That is More Than Just Time
- Windows Phone 8.1 Update Rollout: 20 Nokia Lumia Phones Eligible and 13 New Features to be Added
- Google Nexus 8 Release Date Soon Along with 2 More HTC Android Tablets – Reports
- Three New Moto G Successors Spotted in FCC Document Dubbed Moto G2, Moto M and More --Reports
- iPad Air 2 Release Date Will Skip IGZO Panel; To Rollout with Super-Slim iPad Mini Air
- Upcoming iPad Mini 3 Could be 30% Thinner and Likely be Called iPad Mini Air; Apple Q3 Results Show 9% Decrease in iPad Sales