President Obama, facing a budget stalemate with Republicans, urged leaders of both parties to assemble an interim bill to keep taxes from rising on middle- income Americans as they work on a more comprehensive plan.
Obama said “all of us agree” that rates shouldn’t go up for 98 percent of taxpayers when the new year starts. He also wants unemployment insurance extended for about 2 million Americans who will lose benefits in January, and a commitment to deal with spending cuts next year.
“I am still ready and willing to get a comprehensive package done,” Obama said at the White House yesterday, a day after House Speaker John Boehner couldn’t deliver enough Republican votes for his own alternative plan, throwing negotiations into turmoil.
A plan can be achieved “whether it happens all at once or whether it happens in several different steps,” the president said. “Call me a hopeless optimist, but I actually still think we can get it done.”
The House and Senate won’t return until Dec. 27 to address the end-of-year deadline to avert more than $600 billion in automatic tax increases and across-the-board budget cuts known as the fiscal cliff. That will give them less than a week to reach a deal.
Obama said he talked with Boehner and also met with Senate Majority Leader Harry Reid, a Nevada Democrat. The president later left with his family for Hawaii, where they will spend the Christmas holiday. Obama said he would return next week to continue negotiations.
Boehner’s spokesman, Brendan Buck, said in a statement that the House already has passed its plans to stop the tax increases and spending cuts. “It is time for the Democratic-run Senate to act,” he said.
Boehner, an Ohio Republican, two days ago scrapped his plan to allow higher tax rates on annual income above $1 million, saying it didn’t have enough support among his members.
Democratic leaders in Congress called on Boehner to resume talks on averting the tax-and-spending changes, saying a solution must be bipartisan.
“A comprehensive solution to the looming fiscal cliff will need to be a bipartisan solution,” Reid, a Nevada Democrat, said on the Senate floor. “No comprehensive agreement can pass either chamber without both Democrats and Republican votes.”
Democratic Senator Charles Schumer of New York said Senate Democrats don’t want to move a backup plan unless they’re certain Minority Leader Mitch McConnell won’t block it in the Senate and that Boehner would get it passed by the House.
Regarding McConnell, Schumer said, “I don’t know why he would want to have his members put their necks on the line for a deal that may not pass the House.”
“So the key to this is the House,” Schumer, the third- ranking Senate Democrat, said in an interview.
Boehner said some members of the Republican caucus refused to back his tax measure because they didn’t want to be accused of raising taxes.
It was “not the outcome I wanted, but it was the will of the House,” said Boehner, 63. “They were dealing with the perception that someone might accuse them of raising taxes.”
The Standard & Poor’s 500 Index retreated 0.9 percent to 1,430.15 in New York yesterday. The Dow Jones Industrial Average slid 120.88 points, or 0.9 percent, to 13,190.84. The benchmark 10-year Treasury note yield dropped three basis points, or 0.03 percentage point, to 1.76 percent at 5 p.m. New York time, according to Bloomberg Bond Trader data.
Until Dec. 17, Obama and Boehner had been edging closer to a deal that would have included about $1 trillion each in tax increases and spending cuts.
In his most recent tax proposal, Obama said he would be willing to extend tax cuts for households earning as much as $400,000 a year. Until Boehner made his $1 million threshold offer last week, Republicans had opposed tax rate increases for any income level.
Chad Stone, chief economist at the Center on Budget and Policy Priorities in Washington, said this month that instead of “fiscal cliff,” he prefers the term “fiscal slope” to describe how the effects would accumulate gradually over a matter of months during 2013. The components also can be reversed if a deal is reached early in 2013, he said.
All Bank Investment Consultant articles are archived after 7 days. REGISTER NOW for unlimited access to all recently archived articles, as well as thousands of searchable stories. Registered Members also gain access to exclusive industry white paper downloads, web seminars, blog discussions, the iPad App, CE Exams, and conference discounts. Qualified members may also choose to receive our free monthly magazine and any of our daily or weekly e-newsletters covering the latest breaking news, opinions from industry leaders, developing trends and growth strategies.