Obama bids to avoid 'fiscal cliff'

Obama bids to avoid 'fiscal cliff'

US President Barack Obama and the leading Republican in Congress negotiated at the White House in “frank” talks aimed at breaking a deadlock and steering the nation away from an economy-threatening “fiscal cliff”.

There was no indication whether any progress had been made, though the use of the word “frank” by both sides to describe the talks suggested the president and house speaker John Boehner stuck to their opposing positions.

The meeting was the pair’s second face-to-face encounter in five days as they seek an agreement that avoids major tax increases and across-the-board spending cuts scheduled to kick in on January 1.

Experts warn the “fiscal cliff” could plunge the fragile US economy back into recession.

The meeting came shortly after Mr Obama suggested the sluggish pace of deficit-cutting talks between the administration and congressional Republicans was a result of a “contentious caucus” of Republicans making it difficult for Mr Boehner to negotiate.

Mr Boehner saw things differently: “Unfortunately, the White House is so unserious about cutting spending that it appears willing to slow-walk any agreement and walk our economy right up to the fiscal cliff.”

Before the meeting, he accused Mr Obama of dragging out negotiations. The president is insisting on higher tax rates for household incomes above 250,000 dollars to cut federal deficits.

Mr Boehner says he opposes higher rates, though he has said he would be willing to raise tax revenue instead by closing loopholes and deductions.

Mr Obama, in a TV interview in Minneapolis, said he was hopeful of a “change in attitude” from Republicans on raising taxes on the wealthy. “It shouldn’t be hard to get resolved,” he said.

He added that the notion of not raising taxes “has become sort of a religion for a lot of members of the Republican Party. I think speaker Boehner has a contentious caucus, as his caucus is tough on him sometimes so he doesn’t want to look like he’s giving in to me somehow because that might hurt him in his own caucus”.

There is increasing resignation within the Republican Party that Mr Obama is going to prevail on the rate issue since the alternative is to allow taxes on all workers to go way up when tax cuts implemented during George Bush’s presidency expire on December 31.

Beyond the disagreement over tax rates, there is a deep philosophical disagreement on government spending, especially so-called entitlement programmes like the Medicare health insurance programme for older Americans and the social security pension programme.

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