Obama sets tone for budget battle over wealth tax

US president Barack Obama said last night his re-election means Americans support his approach for avoiding a looming “fiscal cliff” that threatens a new recession — and that his approach means the country’s wealthiest people will have to pay more in taxes.

Obama sets tone for budget battle over wealth  tax

A White House spokesman later said Obama will veto any bill extending tax cuts for those making more than $250,000 (€195,000) a year.

Obama’s brief public comments were his first since his re-election, and they set the tone for upcoming tense talks with congressional Republicans on avoiding a combination of deep spending cuts and the expiration of Bush-era tax cuts that automatically take effect Jan 1, and total $800bn next year alone.

Republicans want fiscal cliff avoidance tactics to rely on spending cuts, but Obama insists that higher taxes for the wealthy must be part of the solution.

“We can’t just cut our way to prosperity,” said Obama.

He reminded his audience that if no deal is struck with a still-divided Congress, “everybody’s taxes will automatically go up on January 1. Everybody’s. That makes no sense. That would be bad for the economy.”

He also invited Congressional leaders of both parties to the White House next week for talks on how to avoid the fiscal cliff.

Obama had been silent since his victory speech on Wednesday, and leading Republicans have filled the vacuum with promises to stand resolutely against any effort to raise tax rates on the country’s richest people.

Obama’s long-held position is that tax rates on family income over $250,000 should jump back up to Clinton-era levels.

All sides say they want a deal, and that, now the election is over, everyone can show more flexibility than in the heat of the campaign. Congress returns to work on Tuesday and faces about a month and a half of work before the holidays.

But Republicans warn a fight could hurt attempts to compromise in a bitterly divided Capitol and threaten Obama’s second-term agenda.

“Raising tax rates will slow down our ability to create the jobs that everyone says they want,” John Boehner, speaker of the Republican-controlled House of Representatives, said shortly before Obama spoke. Boehner has warned that such a plan might not even pass the Senate, where Democrats hold control.

A lot is at stake, as a new Congressional Budget Office report predicted that the economy would fall into recession if there is a protracted impasse in Washington and the US government falls off the fiscal cliff for the entire year.

Meanwhile, David Petraeus has resigned as the director of US intelligence agency the CIA after admitting he had an extra-marital affair.

According to his letter of resignation, Petraeus asked Obama to allow him to resign on Thursday, and yesterday the president accepted.

Petraeus said he had shown “extremely poor judgment” in his affair.

He has been married for 37 years to Holly Petraeus, whom he met when he was a cadet at the US Military Academy at West Point, New York state.

The retired four-star general led the military campaigns in Iraq and Afghanistan, then took the helm of the Central Intelligence Agency in Sep 2011.

Leader’s tears

In the most candid scenes ever captured of Barack Obama on camera, the normally composed US president welled up as he told young campaign workers of his pride in them.

Obama’s campaign team distributed a video of the president’s emotional tribute to his team at his Chicago headquarters the day before, hours after he won re-election to a second term.

“What you guys have done means the work that I am doing is important. I am really proud of that. I am really proud of all of you,” Obama said around three minutes in before pausing as tears welled up and dampened his cheek.

“I am absolutely confident that all of you are going to do just amazing things in your lives,” Obama said, standing alone at a microphone with a poster of his slogan “Forward!” behind him on the wall.

The video was posted on barackobama.com and was distributed by campaign staff on Twitter and email and went viral.

More in this section


Select your favourite newsletters and get the best of Irish Examiner delivered to your inbox