President Barack Obama on Friday invited congressional leaders to the White House to start negotiating a deal to prevent sharp tax hikes and spending cuts from going into effect at the end of the year and said he was “open to compromise.”
“This was a central question during the election,” Obama said in his first postelection comments on the economy. “The majority of Americans agree with my approach.”
Following up, Obama’s spokesman said later that the president would veto any legislation extending tax cuts for families making $250,000 or more.
The president, speaking in the White House East Room, said he wasn’t wedded to every detail of the plans he outlined during the election, adding, “I’m open to compromise.” But he offered no indication that he was willing to back down.
Republicans stood their ground. At the Capitol, Republican House Speaker John Boehner said he remains unwilling to raise tax rates on upper-income earners. But he left open the possibility of balancing spending cuts with new revenue that could be achieved by revising the tax code to lower rates but also eliminate some tax breaks.
Obama said he had invited congressional leaders of both parties to the White House next week for their first postelection negotiations. Their assignment: avert the “fiscal cliff” tax increases and automatic spending cuts due to hit in January. Both parties agree that those changes, the result of failed deficit-cut talks earlier this year, could send the economy back into recession.
He avoided any mention of actual tax rates in his remarks, saying only that the wealthy should pay more. That omission might seem to open a door for negotiating, but spokesman Jay Carney’s statement on the likelihood of a veto suggested otherwise.
Both sides agree that failure to address the automatic tax increases and spending cuts could cripple the economy. A Congressional Budget Office report on Thursday projected that the economy would fall back into recession if there is a protracted impasse in Washington.
Obama and Republicans have tangled over the tax cuts first approved by George W. Bush for years. The president gave in to Republican demands to extend the cuts across the board in 2010, but he ran for re-election on a pledge to allow the rates to increase on families making more than $250,000 a year.
Republicans say raising tax rates on the wealthiest Americans is a non-starter. Boehner said it would hurt small businesses while they are still struggling to recover from the recession.
“I’m proposing that we avert the fiscal cliff together in a manner that ensures that 2013 is finally the year that our government comes to grips with the major problems that are facing us,” Boehner said Friday. He said cuts to Medicare, Medicaid and food stamps, known as entitlement programs, have to be part of the equation.
Boehner also indicated that raising the debt limit, which the government will reach sometime in the spring, should be part of any negotiations. Pressed for details beyond that framework, he said he didn’t want to limit ideas to address the problem. He said the burden is on Obama.
“This is an opportunity for the president to lead,” Boehner said. He repeated a version of that phrase four times during the 11 minutes he spoke. “This is his moment to engage the Congress and work toward a solution that can pass both chambers.”
If Congress and the administration don’t act, the abrupt fiscal tightening would tip the weak economy into recession, analysts have said. The nonpartisan Congressional Budget Office said this week unemployment could rise above 9 percent year if nothing is done to avert the so-called fiscal cliff.