Political Intelligence

President Obama and John Boehner outline competing plans for fiscal cliff, remain at odds on tax cuts for the wealthy

WASHINGTON—President Obama Friday used his first public appearance since his re-election to call on Congress to immediately make tax cuts permanent for the middle class, declaring that Tuesday’s result was a repudiation of congressional ``dysfunction’’ and proved that Americans want Republicans to compromise.

Whether the wealthy get tax cuts along with the other 98 percent of taxpayers, said the president, should be of part of broader fiscal negotiations next year to reduce long-term deficits. In the meantime, he said, taxes on the rich should be allowed to increase to help reduce the deficit.

``This was a central question during the election,’’ Obama said in a brief speech at the White House, where he was surrounded by supporters who frequently applauded. ``It was debated over and over again, and on Tuesday night we found that a majority of Americans agreed with my approach.’’

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The remarks were the first public statements Obama has made since his re-election and he used the opportunity to exert pressure on Republicans in the House. The president is scheduled to meet next week with House Speaker John Boehner and other Capitol Hill leaders to begin negotiations.

Obama’s comments indicated he is willing to take partial action before the end of the year to avoid tax increases, while waiting until next year to tackle the more complex tasks of overhauling the tax code and reducing the costs of entitlement programs like Medicare and Social Security.

``Our job now is to get a majority in Congress to reflect the will of the American people,’’ Obama declared.

Obama’s proposal is at odds with the position of House Speaker John Boehner, who earlier Friday said all the tax cuts—including those for the rich—should be extended until next year to provide more time to work out a bigger deal on taxes and spending cuts.

``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.

As he did earlier in the week, Boehner struck a more conciliatory tone while indicating that the House is not prepared to accept increases in tax rates.

`We both understand that trying to find a way to avert the fiscal cliff is important to our country,’’ Boehner added of the upcoming negotiations with the White House. But, he added, increasing tax rates for the wealthy ``will slow down our ability to create the jobs that everyone says they want.”

The Republican speaker said he is open to producing new tax revenues as part of an overall tax-code overhaul that would include rate reductions. But he would not get specific.

``It’s clear that there are a lot of special interest loopholes in the tax code, both corporate and personal,’’ he said. ``There are all kinds of deductions, some which make sense, some don’t.’’

On Wednesday, the day after President Obama won re-election, Boehner expressed a willingness to negotiate but repeated his opposition to raising tax rates. Any new revenues, he said, would have to result from growth that is produced by eliminating unspecified tax breaks.

Obama and Congress must act before the end of the year if they want to avoid the expiration of personal income tax cuts that were put into place during the administration of George W. Bush and then extended by Obama and Congress two years ago. Additionally, payroll tax cuts also are scheduled to expire. Deep spending cuts scheduled as part of the 2011 debt deal also are scheduled to take effect.

Most scenarios around delaying the start of this ``fiscal cliff’’ until next year have included postponing the automatic cuts, as well. But Boehner on Friday would not discuss how the spending cuts—called the ``sequester’’—would fit into his call for a delay. Obama also did not discuss how he proposes handling the sequester.

Obama called for quick action to promote greater confidence in the economy. By acting separately on middle-class tax cuts before they are set to expire in January, he said, Washington could quickly eliminate much of the uncertainty around the looming ``fiscal cliff’’ that is preventing the economy from growing faster.

``If Congress fails to come to an agreement on an overall deficit reduction package by the end of the year, everybody's taxes go up—including the 98 percent of Americans who make less than $250,000. That doesn’t make sense. We shouldn’t need long negotiations or drama to solve that part of the problem.’’

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