* Obama says approach is supported by Tuesday’s election
* Says he’s “not wedded to every detail” of his own plan
* Republican leader Boehner urges Obama to lead
By Mark Felsenthal and David Lawder
WASHINGTON, Nov 9 (Reuters) – President Barack Obama said on
Friday he was prepared to compromise with Republicans to avert a
looming U.S. fiscal calamity, but insisted a tax increase for
the rich must be part of any bargain.
Obama, who was re-elected on Tuesday, reminded Republicans
that his approach to avoiding steep tax hikes and spending cuts
due in January, which could trigger another recession, had just
won the backing of Americans at the polls. His spokesman said he
would veto any deal that did not include an extra contribution
from the wealthiest.
Obama invited congressional leaders to the White House next
Friday to discuss the issue, the most pressing challenge as the
president prepares to starts his second term in office. He will
also hold a news conference on Wednesday.
John Boehner, the Republican speaker of the House of
Representatives, repeated his party’s commitment not to raise
anyone’s tax rates as part of a deal to address the crisis.
He too claimed a mandate from the elections, in which voters
gave Republicans continued control of the House.
The statements showed the two men, who have been divided on
the issue for two years, were still far apart, leaving doubts
over whether the “fiscal cliff” could be averted. Congress is
expected to address it when it reconvenes next week for a
post-election lame-duck session.
“Boehner and Obama are using softer tones, but the substance
of what they’re saying hasn’t changed very much, and it doesn’t
look like there’s been any movement from the last time they had
a budget discussion,” said Stan Collender, a former
congressional budget aide.
The automatic across-the-board budget cuts due in January
were scheduled in August 2011 as part of a deal to raise the
U.S. debt ceiling. Aimed at cutting the federal budget deficit,
the planned measures could take an estimated $600 billion out of
the economy and severely hinder economic growth.
OBAMA SEEKS ‘BALANCED’ APPROACH
In his first event at the White House since beating
Republican Mitt Romney in Tuesday’s election, Obama called on
Congress to work with him to produce a plan.
“I’m not wedded to every detail of my plan. I’m open to
compromise. I’m open to new ideas,” he said. “I’m committed to
solving our fiscal challenges, but I refuse to accept any
approach that isn’t balanced.”
“If we’re serious about reducing the deficit, we have to
combine spending cuts with revenue. And that means asking the
wealthiest Americans to pay a little more in taxes,” he said.
Obama said the majority of Americans believed those making
more than $250,000 a year should pay more taxes, “So our job now
is to get a majority in Congress to reflect the will of the
American people. I believe we can get that majority.”
“I was encouraged to hear Speaker Boehner agree that tax
revenue has to be part of this equation,” he added.
While striking a conciliatory tone toward the Republican
House majority, Obama said voters supported his ideas, including
raising taxes on the wealthiest Americans.
“I just want to point out, this was a central question
during the election. It was debated over and over again. And on
Tuesday night, we found out that the majority of Americans agree
with my approach,” he said.
Tax cuts for people of all incomes enacted under President
George W. Bush are due to expire in January and Obama said he
was willing to extend them for those making less than $250,000
immediately but not for those making more. His spokesman, Jay
Carney, said Obama would veto any bill that extends cuts for the
top 2 percent of wage earners.
MARKETS WORRIED
Concerned that U.S. growth might stall if the fiscal cliff
becomes reality, financial markets at home and abroad are paying
close attention to the political wrangling. U.S. stocks cut
gains on Friday after Obama spoke.
Britain’s top shares fell on Friday, as worry over the U.S.
fiscal cliff overshadowed robust U.S. consumer sentiment data.
The FTSE 100 index closed down 0.1 percent.
Boehner called on Obama to play a more active role in
addressing the issue.
“This is an opportunity for the president to lead. This is
his moment to engage the Congress and work towards a solution
that can pass both chambers,” Boehner told a news conference.
Top Senate Republican Mitch McConnell named taxes as the
main bone of contention.
“I was glad to hear the president’s focus on jobs and growth
and his call for consensus. But there is no consensus on raising
tax rates, which would undermine the jobs and growth we all
believe are important to our economy,” he said.
The White House staunchly defended Obama’s plans to go on a
Southeast Asia tour this month, including a first-ever
presidential visit to once-isolated Myanmar, despite the
unresolved fiscal cliff issues.
White House spokesman Jay Carney cited the planned meeting
with congressional leaders a day before he leaves on his Nov.
17-20 trip as proof of Obama’s early engagement in negotiations.
“And I’m absolutely certain that the work that is begun
there will continue while he is traveling,” he told reporters.
While disagreeing on immediate measures to avert the fiscal
crisis, Obama and Republicans may find common ground in calls
for enactment over the next six months of a larger package of
deficit reduction measures, including a rewrite of U.S. tax
laws.
Obama sent a signal to Republicans of a willingness to
compromise by calling for reduction in healthcare costs
including in federal programs for the poor and the elderly, a
favorite issue of fiscal conservatives.
“I intend to work with both parties to do more – and that
includes making reforms that will bring down the cost of
healthcare so we can strengthen programs like Medicaid and
Medicare for the long haul,” he said.
The non-partisan Congressional Budget Office reiterated on
Thursday that if left unaddressed, the abrupt fiscal tightening
would knock the economy back into recession, with unemployment
rates soaring back to about 9 percent. The rate is now 7.9
percent.
It also warned of a crisis if the United States did not stem
the growth of its exploding deficit.
