In an interview broadcast today on NBC’s “Meet the Press,” Obama warned of “an adverse reaction in the markets” if Congress doesn’t act.
Republicans “say that their biggest priority is making sure that we deal with the deficit in a serious way, but the way they’re behaving is that their only priority is making sure that tax breaks for the wealthiest Americans are protected,” Obama said, adding that his offers to Republicans have been “so fair that a lot of Democrats get mad at me.”
In a statement, House Speaker John Boehner, an Ohio Republican, called Obama’s comments “ironic, as a recurring theme of our negotiations was his unwillingness to agree to anything that would require him to stand up to his own party.”
The president’s interview with NBC was taped yesterday at the White House. At the other end of Pennsylvania Avenue, Senate negotiators from both parties were seeking compromise legislation to prevent at least some of the tax increases and spending cuts from taking effect.
'EXCEEDINGLY GOOD'
Appearing on “Fox News Sunday,” Senator Lindsey Graham, a South Carolina Republican, said the prospects for a deal before Jan. 1 are “exceedingly good.” They will include tax increases on upper-income Americans, he said, and represent a “political victory to the president.”
“Hats off to the president, he won,” Graham said. “He stood his ground. He’s going to get tax rate increases -- maybe not $250,000, but upper-income Americans.”
Graham said the “sad news for the country” is that any deal now won’t address debt and will guarantee a fresh fight over deficit reduction when the debt ceiling debate resurfaces early next year. He called on Republicans to have the “courage of our convictions.”
Senators Charles Schumer, a New York Democrat, and Jon Kyl of Arizona, the Senate’s No. 2 Republican, assessed the odds of a deal before Jan. 1 at better than 50-50. “I think a little higher than that,” Schumer said on ABC’s “This Week,” while Kyl said, “I don’t disagree with Chuck.”
At the same time, Schumer said there are “no breakthroughs yet” by bipartisan negotiators in the Senate. Kyl said there is a “significant effort” by “responsible people on both sides of the aisle” because “if we are not able to reach an agreement, it will be dire.”
'A CHASM'
Not all senators were as optimistic. Appearing on CBS’s “Face the Nation,” Dick Durbin of Illinois, the Senate’s No. 2 Democrat, said, “There’s still a chasm here,” though he declined to say that a deal is impossible. Senator Tom Coburn, on the same program, said the two sides are “far apart.”
Obama said on NBC that “if all else fails,” when a new Congress convenes on Jan. 3 “the first bill that will be introduced on the floor will be to cut taxes on middle-class families.”
Asked about the immediate economic impact of going over the fiscal cliff -- a term used by Federal Reserve Chairman Ben S. Bernanke in February -- the president said, “It’s hard to speculate on the markets, but obviously I think business and investors are going to feel more negative about the economy next year.”
'ADVERSE REACTION'
If Americans’ taxes rise and consumer spending is depressed, Obama said, “then obviously that’s going to have an adverse reaction in the markets.”
Markets dropped last week as the stalemate continued. The Standard & Poor’s 500 Index fell for a fifth day on Dec. 28, by 1.1 percent to 1,402.45 at the 4 p.m. close in New York. The benchmark Treasury 10-year yield declined four basis points, or 0.04 percentage point, to 1.7 percent at 5 p.m. in New York, according to Bloomberg Bond Trader.
Senate Majority Leader Harry Reid, a Nevada Democrat, and Minority Leader Mitch McConnell, a Kentucky Republican, plan to brief party members in closed-door caucuses this afternoon on the status of private weekend talks between their staffs.
Boehner has called the House into session at 2 p.m. Washington time to be ready for possible action on the budget dispute. The Senate convenes at 1 p.m.
Bloomberg News
