WASHINGTON – President Barack Obama is lobbying business and labour groups to support his plan to avoid what’s been called the “fiscal cliff,” telling both sides he remains committed to requiring the wealthy to pay more in taxes.
Obama was meeting Wednesday with about a dozen business executives as the White House and Congress face a “fiscal cliff” with a series of expiring tax cuts and across-the-board spending cuts scheduled to take effect Jan. 1 because lawmakers failed to reach a deal to reduce the federal debt. Business groups want an agreement before the end of the year, warning that the uncertainty could roil the financial markets and harm the economic recovery.
The White House meeting follows a gathering of labour leaders and liberal groups Tuesday in which participants said Obama remained clear that he would push for his campaign pledge of making the wealthiest Americans pay more in taxes.
“We’re prepared to stand up to make sure there is shared sacrifice here, so the rich actually start paying their fair share and the middle class don’t get soaked for that,” said AFL-CIO labour union federation President Richard Trumka.
Obama was expected to speak in greater detail on the year-ending lame-duck session of Congress at a White House news conference on Wednesday. Lame-duck session refers to the outgoing legislature that sits after the election but before the newly elected membership is sworn in early next year.
Congress’ failure to act would lead to spending cuts and higher taxes on all Americans, with middle-income families paying an average of about $2,000 more next year, according to the nonpartisan Tax Policy Center. The outgoing Congress has been criticized as the least productive in recent history.
But hanging over the political landscape is the largely unrelated but distracting revelation of marital infidelity that drove former Gen. David Petraeus to resign as CIA director days after the elections. Now the scandal has spread to the top U.S. commander in Afghanistan, Gen. John Allen, who is under investigation for alleged “inappropriate communications” with a Florida woman who received threatening emails from Petraeus’ former lover.
Washington politicians have just over seven weeks, including breaks for the Thanksgiving holiday next week and the Christmas holiday season, to avert the year-end, economy-jarring expiration of tax cuts Americans have enjoyed for a decade, combined with automatic across-the-board reductions in spending for the military and domestic programs.
That outcome — barring legislative compromise by Jan. 1 — is self-imposed punishment for last year’s failure by a bitterly divided Congress and White House to deal with the government’s spiraling debt and overhaul its unwieldy tax code. The Congressional Budget Office estimates that the austerity program would reduce the deficit by nearly $700 billion by the end of 2013. But the non-partisan organization also says millions of jobs could be lost, which could knock the U.S. economy back into a recession.
The big question is how much ground both sides are willing to give after the nation’s voters endorsed the status quo of divided government — a Democratic president and Senate, and a Republican House of Representatives.
Obama and his primary antagonist, Speaker of the House John Boehner, the most powerful Republican in Washington, have begun laying out their positions.
The president demands that taxes go up for American households earning more than $250,000 a year. He also says he is willing to see cuts in government spending, although he has not offered specifics.
Republicans — the low-tax, small-government tea party movement in particular — insist that tax rates not be raised for any income level and instead call for even deeper cuts in spending, although the targets of those reductions are unknown.
Since the election last week, Boehner and Senate Republican Leader Mitch McConnell have suggested a new willingness to bring Republicans behind an increase in government revenue, but not one that is funded by higher tax rates on upper-income Americans.
At issue is an annual U.S. budget deficit that now is routinely above $1 trillion and a national debt that has risen to near $16.5 trillion.
Obama pledged to raise taxes on the rich during his first term but backed off his stance in late 2010 after Republicans seized control of the House of Representatives in the midterm election. During his meeting with labour leaders, Obama said he was not going to bend on letting the tax cuts expire for top wage earners, according to a participant in the meeting who spoke on the condition of anonymity to discuss the private session. The president said the tax issue was clear during the election and said he had extended those enacted during President George W. Bush’s administration once and would not do so again, the participant said.
The CEOs have urged Congress to extend the Bush-era tax cuts until a tax overhaul can be reached and prevent the spending cuts from taking place. The executives say the uncertainty over the fiscal cliff is hurting the nation’s business climate and preventing hiring.
Obama will meet with several CEOs, including the heads of the Aetna insurance company, Honeywell, Wal-Mart, Procter & Gamble and Ford.
The participants include members of the Campaign to Fix the Debt, a group founded by Alan Simpson and Erskine Bowles that has pushed for a long-term plan to fix the nation’s debt and deficits.
Simpson, a former Wyoming senator, and Bowles, a former White House chief of staff, served as co-chairs of Obama’s bipartisan National Commission on Fiscal Responsibility and Reform, which proposed $3 in spending cuts for every $1 in additional revenues.
Among the CEOs scheduled to attend the meeting are General Electric CEO Jeff Immelt, who chairs Obama’s jobs council, and American Express CEO Kenneth Chenault and Xerox CEO Ursula Burns, who are members of the council.