President Barack Obama and Republicans crept closer to talks on avoiding a recession-threatening package of automatic tax increases and spending cuts, but the White House insisted it would not budge on higher taxes on the wealthy.
To drive home the point, Mr Obama pressed his hard line on tax increases for the rich from the basement of a family’s home in suburban northern Virginia yesterday, declaring they would suffer economically if Washington did not extend tax cuts for the 98% of American families earning less than 250,000 dollars a year.
“We’re in the midst of the Christmas season,” the president said. “I think the American people are counting on this getting solved. The closer it gets to the brink, the more stress there is going to be.”
Mr Obama and politicians have until the end of the year to avert across-the-board spending cuts and across-the-board tax increases.
The president reiterated the firm stance he has taken in recent days, warning that he was willing to let that economy-rattling double whammy take effect if Republicans did not drop their opposition to higher tax rates for the wealthy.
“Just to be clear, I’m not going to sign any package that somehow prevents the top rate from going up for the folks in the top 2%,” Mr Obama said.
“But I do remain optimistic that we can get something done that is good for families like this one and is good for the American economy.”
The president’s quick trip to the Santana family’s home – a 15-minute drive from the White House – is part of his effort to rally public support for his tax proposals.
The family he visited was one of several hundred thousand who shared a story online, at the White House’s urging.
With a new AP-GFK poll showing clear support for Mr Obama’s position and dwindling backing for cutting government services to curb the climbing US budget deficit, the president and House of Representatives speaker John Boehner spoke by telephone on Wednesday for the first time in days about a way to avoid the so-called fiscal cliff which would occur on January 1.
The phone contact initiated by Mr Obama and disclosed by a Boehner spokesman, raised the possibility that negotiations could soon resume on heading off what some economists warn could be a serious blow to an economy still recovering from the Great Recession.
So far Republican leaders have said they would only agree to higher tax revenues by closing loopholes or reducing tax breaks, not by raising rates. The opposition has struggled, however, to remain united and find its footing in talks with a president emboldened by his November election victory and unified congressional Democrats.
While insisting that tax rates go up on the top 2% of American earners, Mr Obama too, has called for government spending cuts but by less than the Republicans want.
Mr Obama, addressing business leaders on Wednesday, said the White House and Republicans could reach an agreement “in about a week” if the Republicans drop their opposition to raising taxes on families making more than 250,000 dollars a year.
“If we can get the leadership on the Republican side to take that framework, to acknowledge that reality, than the numbers actually aren’t that far apart,” he said.
Administration chiefs are hardening their warnings that Mr Obama is willing to risk going over the cliff.
Treasury secretary Timothy Geithner said on Wednesday that the Obama administration was “absolutely” ready for that risky step.
Mr Geithner said the administration thinks budget deficits are so large that they cannot be closed without boosting tax rates on the wealthiest 2% of Americans.
He also said that the administration would reject a budget plan that did not include an increase in the federal borrowing limit, which is expected to expire early next year.
But Mr Geithner said he still thought progress was being made in the budget negotiations and that the outlines of an agreement were becoming clearer.
“They look inevitable,” he said.
Speaking to business chiefs on Wednesday, Mr Obama warned Republicans not to inject the threat of a government default into negotiations over the fiscal cliff as a way of extracting concessions on spending cuts.
“It’s not a game I will play,” he said, recalling the brinkmanship of last year in which a budget stand-off pushed the Treasury to the edge of a first-ever default and led to a downgrade of the US credit rating.