Newly re-elected U.S. President Barack Obama says that Americans have sent him back to Washington because they support his "balanced" plan to solve the country’s fiscal problems, which includes a mix of public-spending cuts and higher taxes on the rich.
In his first public remarks since the November 6 election, Obama urged leaders of the Democratic and Republican parties to move quickly to avoid a "fiscal cliff"
that could put the U.S. into recession and damage the global economic recovery.
Declaring that, "We can't just cut our way to prosperity,” Obama said that while he is "open to compromise," he will not “accept any approach that isn’t balanced.”
Tax increases for middle-class Americans will automatically come into effect if Congress does not reach a deficit-reduction agreement before the end of this year.
Obama warned that inaction or delay could worsen the fragile economic recovery, and he called for swift action on issues where lawmakers agree and compromise on areas where they don’t.
“It [the fiscal cliff] would be bad for the economy and would hit families that are already struggling to make ends meet," the president said. "Now, fortunately, we shouldn't need long negotiations or drama to solve that part of the problem.”
He invited leaders from both sides of Congress to the White House next week to discuss details of a "grand bargain" that lawmakers failed to reach last year, when a similar fiscal crisis loomed.
Democrats insist that they will not agree to any deal that only relies on economic growth to raise revenue. They are demanding that taxes on Americans making more than $250,000 per annum go up to avoid burdening the poor and middle class with deep cuts in social welfare programs. Obama’s reelection was a mandate from voters for that approach, they say.
But Republicans, who campaigned on a platform that ruled out tax increases on the wealthy, also believe they received a mandate from the American people, who voted to keep Republicans in the majority in the House of Representatives.
House Speaker John Boehner (Ohio) told ABC News on November 8 that Republicans will continue to oppose tax hikes, which he described as "unacceptable."
Nonetheless, in a press conference he held just hours before Obama's remarks, Boehner said he believes agreement can be reached.
"This is an opportunity for the president to lead," he said. "This is his moment to engage the Congress and work towards the solution that can pass both chambers."
Late in the afternoon of November 9, White House spokesman Jay Carney said Obama will veto any bill that contains a tax cut for the wealthy.
The stakes couldn’t be higher. A new Congressional Budget Office report this week predicted that the economy would fall into recession if there is a protracted impasse in Washington and the government falls off the fiscal cliff for the entire year.
The analysis says the looming combination of automatic tax increases and spending cuts would cut the massive U.S. deficit by $503 billion through next September, but that the fiscal austerity would cause the economy to shrink by 0.5 percent next year and cost millions of jobs.
With reporting by AP