Obama, Boehner head for stalemate on tax cuts

President Barack Obama, accompanied by Vice President Joe Biden, gestures as he speaks about the economy and the deficit, Friday, Nov. 9, 2012, in the East Room of the White House in Washington.

/ AP Photo/Pablo Martinez Monsivais

Updated: 2:56 p.m. ET

Setting the stage for a contentious debate over reducing the nation's deficit, President Obama today drew a clear line in the sand about the extent to which he will compromise in order to get a congressional deal on deficit reduction, insisting that while he is "open to new ideas" and "committed to solving our fiscal challenges," he will reject any approach that does not involve a tax increase on America's highest-income families.

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Special Report: Obama addresses economy, fiscal cliff

The president, speaking from the East Room of the White House to an audience made up partly of middle-class Americans, stressed his commitment to pursuing a bipartisan approach in tackling the so-called "fiscal cliff," a combination of tax increases and spending cuts scheduled to go into effect January 2013 that, left untended, threatens to plunge the U.S. economy back into recession.

"The American people voted for action, not politics as usual. You elected us to focus on your jobs, not ours," he said. "In that spirit," Mr. Obama said, he has invited leaders from both parties, as well as business, labor and civic leaders from across the country, for a dialogue on staving off what many believe is an impending fiscal crisis.

The Bush-era tax cuts are set to expire at the end of the year, and January 1, 2013 also marks the day when $1.2 trillion worth of budget cuts, which cut across domestic programs and the Pentagon, begin to go into effect unless Congress can reach a deal to offset them. On the same day, a payroll tax cut will expire, as will a deferment of payment cuts to Medicare physicians.

"Our top priority has to be jobs and growth. That's the focus of the plan that I talked about during the campaign," said Mr. Obama. But, in a direct challenge to House Republicans, he rejected the idea of extending the Bush-era tax cuts for Americans with incomes of over $250,000 per year.

• The "fiscal cliff" explained
• Boehner: Obama "has to lead" on taxes, immigration

"I'm open to compromise. I'm open to new ideas. I'm committed to solving our fiscal challenges," he said. "But I refuse to accept any approach that isn't balanced. I am not going to ask students and seniors and middle-class families to pay down the entire deficit while people like me, who are making over $250,00 a year, aren't asked to pay a dime more in taxes. I'm not going to do that."

Publicly, House Speaker John Boehner has signaled an openness to working with the president and Democrats in forging a deal to avert going over the fiscal cliff, stressing that Republicans want to "rise above the dysfunction, and do the right thing together for our country in a bipartisan way."

But in his first press conference following Mr. Obama's re-election, Boehner, too, drew a firm line on the issue of tax cuts. Even while suggesting the Republicans would be open to some increases in revenue, he rejected the notion outright that such money could be brought in via any form of tax hike, immediately setting Democrats and Republicans up for another bitter fight over an issue that has dogged them for years now.

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Boehner: Fiscal cliff is Obama's "moment" to lead

Boehner reiterated his position shortly before Mr. Obama's speech, noting that Republicans want to avert the fiscal cliff without raising any taxes and "in a manner that ensures that 2013 is finally the year that our government comes to grips with the major problems that are facing us." Next year, he argued, "should be the year we begin to solve our debt through tax reform and entitlement reform."

Mr. Obama appears ready to call that bluff, suggesting that his re-election serves as a mandate from the public to carry out his calls to permanently suspend some of the Bush tax cuts. Following the president's remarks, his office reiterated that he would veto a bill to extend those cuts on incomes above $250,000.

"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," said Mr. Obama. "That includes Democrats, independents and a lot of Republicans across the country, as well as independent economists and budget experts. That's how you reduce the deficit, with a balanced approach."

The president's next task, as he acknowledged, is to get a Republican-led Congress to comply with his wishes.

"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. So I look forward to hearing his ideas when I see him next week," said Mr. Obama, declining to acknowledge that Boehner has already rejected his approach in two separate news conferences.

Democrats, however, seem to think that House Republicans will cave.

"Boehner wants to compromise; that's why he gave that speech," Sen. Chuck Schumer, D-N.Y., told MSNBC, of his first press conference. "He's not a hard-right guy, he's a mainstream conservative ... and I think it's going to help because the hard right is chastened in a lot of ways."

Even so, economists fear a prolonged stalemate on tackling the fiscal cliff could lead to major setbacks for the U.S. economy.

According to the nonpartisan Congressional Budget Office, inaction on the fiscal cliff could have devastating consequences to the nation's fragile growth: Its analysts warn that a prolonged deadlock could hike the unemployment rate back up to 9.1 percent by next fall, and that that preventing the defense cuts would alone save 40,000 jobs. Meanwhile, the White House lists more than 1,200 government programs that would be subject to cuts if the sequester goes into effect, in which case the number of U.S. food inspectors will go down, FEMA will be subject to cuts, and the FAA's budget will shrink.

On Friday afternoon, Senate Minority Leader Mitch McConnelly, R-Ky., backed Boehner up, declaring in a statement that "there's no consensus on raising taxes."

"While I appreciate and share the President's desire to put the election behind us, the fact is we still have yet to hear an actual plan from the President for addressing the great economic challenges we face," said McConnell. "Now that the election is over, the American people expect a plan that reduces spending, reforms the entitlement system, and puts us on a path to ending our chronic annual deficits--without harming an already fragile economy."

[Dancing-in-the-Streets]

Mortar1SG_29 replies:
Hill, I hear what you are saying.

But Ms. zann is a friend. I like her. She has a heart of gold. She really does care for others.

The problem is that her caring gets in the way of her thinking and does not realize the results of her actions. I wish she did, because her caring would be much more effective and less offensive in a more Christian and ethical. I know now that she doesnt see it...but I have faith she will.
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Mortar, thank you! : )

One belief I hold has not changed in the least. And that is that an airplane needs two wings to fly. For this country to make it, we need people like you Mortar, as much as we need people like me. But what we seem to have forgotten was just how to meet in the middle to compromise.

I like when I see a glimpse of hope from you that they may yet be possible!
: )

[hillzhaveays]

GOP-R--Con-Men replies:
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Mortar,

It's obvious that you and Hillz have a wild west, every man for himself, I got mine so I don't give a damn if you get yours mentality. That's why your selfish bunch lost. You fail to realize we are all in this together.
_________________________________

I have destroyed your BS tax the rich argument beyond all measure con (with shallow's help of course).

So, if tax cuts make the economy soar, how is that "I've got mine I don't give a damn"? I want the economy to soar so people get jobs, we increase tax revenue and we start whittling down the national debt.

You wealth envyists are so fixated on what the other guy HAS - acquired by working harder than you, being more intelligent than you or being more talented than you.

When someone shows you that work (or jobs)can be made available through cuts, which I have done, and you ignore that - instead concentrating again on some evil "rich guy", it means you and your friends are all just a bunch of greedy little pigs who want it given to you instead of working and getting it yourself. You disgust hard working americans.

[fourvahl]

I think Obama should quit trying to sell to Republicans. If he took the tax hike to the people who elected him I know exactly what they'd say.

[hillzhaveays]

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ZannZelsVictoryDance says:
hillzhaveays replies:
It's a global economy zann. You can't stop jobs from going overseas
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I never said anyone should have stopped them from outsourcing.

What I'm saying is they are now reaping their just rewards for turning their backs on their country. Jack their taxes right back up to where they were before Bush handed them the tax cuts! They don't deserve them, they did not use them wisely.
reply

hillzhaveays replies:
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zann, when you increase taxes on a business some of those taxes are passed on to the consumer.

Tax Incidence is the concept of Who Bears The Burden, when a tax is applied.

Consumer prices are raised when taxes are raised on business. Not dollar for dollar though. When you factor in the Price Elasticity of Demand, generally, 56% of the tax will be passed on to the consumer, with 44% being absorbed by the corporation.

Does this erase 44% of their profits? Not at all. They will change their behavior to limit that liability. This is done any number of ways and if they are smart, they will erase the whole 44% that might have gone to them. They can't lower their fixed cost to absorb the tax, they lower Variable Costs. One way to limit the tax increase would be to hire less people - equals less labor cost (a Variable Cost). or they could ship a bunch of jobs overseas to a cheap labor market.

Does this make them evil? Hardly, in my opinion. It's business.

The Left calls this evil not recognizing a basic principle: If you are weak, you go out of business. If something cuts into your profits, this makes you weaker. The result of a bunch of tax increases would be catastrophic to our economy. And you would have a whole lot more people out of work.

There goes your tax revenue.

Mortar1SG_29 replies:
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Ms. Zann, their country turned its backs on them.

Mortar1SG_29 replies:
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Oh, the government doesnt use our taxes wisely. You have it backwards.

ZannZelsVictoryDance replies:
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I repeat:

Jack their taxes right back up to where they were before Bush handed them the tax cuts! They don't deserve them, they did not use them wisely.

Mortar1SG_29 replies:
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Ms. Zann, you dont deserve their money.

Again, you wanting to steal from others is apparent.

ZannZelsVictoryDance replies:
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Its called taxes Mortar - a way of paying for a government.

Government doesn't come free.

And taxes are not theft. If they were, Jesus would have told us not to pay them. Instead.........well you know what he said!

Mortar1SG_29 replies:
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You havelearned well from Slow and the other idiots on here, Ms. Zann.

But taxes are only levied to pay for government programs. The problem with this, it depends on the program if it is theft or not.

If taxes are levied to pay for a good or service on our behalf, that is government.

If taxes are levied to hand to someone else who did nothing to earn it (no good or service), that is theft.

And Jesus? Jesus was never for forcing one person to help another. That is evil!

ZannZelsVictoryDance replies:
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I learned what I did in Sunday School Mortar.

Mortar1SG_29 replies:
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You didnt learn to force one person to help another in Sunday School.

At least not a Christian Sunday School.
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Zann, you apparently ONLY went to Sunday School and never went to anyplace that would give you a legitimate education.

If you had an education, you would know that jacking up taxes on businesses, as I explained earlier (so much so that a child would understand it), means they pass on some of those taxes to you (or whoever buys their products) and whatever they don't pass on, they absorb - but they just change their behavior to minimize the taxes.

As you and your friends constantly do out of complete ignorance, you ignore the obvious.

[hillzhaveays]

RepubliCon_Liar_RobMe replies:
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Hey Ignorant Republi-minion HILLZHAVEAYES.... actually those are all just bogus numbers I made up.

..... LOL!... and you were "shallow" enough to hook onto them.

I did it just to prove that ignorant Republi-minions grab anyone's information, right or wrong...as long as it "fits" in their perspective of things.

Guaranteed, you won't find that data anywhere, other than in my brain.... and you bought into it, hook, line and sinker.

(hehehehehehe!..... what a gullible ignoramus you are!)
_____________________________________
You must be in third grade because this is so transparent LOL

I checked your numbers, they are off, but were close enough that I didn't bother to correct you.

What actually happened is you screwed up because you are so busy thinkning up funny little names, cackling like an idiot and spamming all the time, you didn't stop to think about what you were spamming.

Then I used your own number against you in a way that is incontrovertible and the only way for you to save face, from getting your butt whipped in a debate, is to claim they are false.

And you screwed up again. If your numbers are false, and you actually did make them up, you just admitted to cooking your lies - plus you essentially have spammed a lie all over the site and just admitted to it.

You are such an idiot it doesn't even bear discussing. If I were you, I would embarrassed at broadcasting my stupidity to the world. But you are probably too stupid to be embarrassed.

[hillzhaveays]

Oh, by the way, this article backs up your numbers - you actually are a little high on the increase for 2005, by 2%:

http://www.nytimes.com/2005/07/13/business/13deficit.html?pagewanted=all&_r=0


"The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well.

Most of the increase in individual tax receipts appears to have come from higher stock market gains and the business income of relatively wealthy taxpayers. The biggest jump was not from taxes withheld from salaries but from quarterly payments on investment gains and business earnings, which were up 20 percent this year.

That was similar, though much smaller than a sharp rise in tax revenue during the stock market boom of the late 1990's, which was followed by plunges in revenue when the market bubble burst."

[hillzhaveays]

bye shallow LOL

[hillzhaveays]

GOP-R--Con-Men replies:
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hillzhaveays replies: You have not proven that tax cuts don't work, you have only proven that you don't know how to analyze information without diluting it with your partisan hack goggles.
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Hillz, those tax cuts have been around for ten years with the wealthy banking the money instead of creating jobs. Why should it continue when the weslthy are not using it to create jobs?

Surely you can't be that dense, or are you?
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Well, I think you've cornered the market on dense, con.

Leading up to the catastrophe, they were creating plenty of jobs, as I deduced in that response (and which you missed) - if taxes are cut, but revenue goes up, the only thing that could make it go up is increased investment (which means the company invests in itself by hiring more workers - who then pay taxes on income, increasing revenue).

As for your contention that the wealthy "bank" the tax cuts for the last 10 years, I hope they have, because the wealthy understand that investment leads to more wealth (or it can if you are smart). Which means once Obama smartens up and lays off the "tax the rich" BS argument, they will start investing their money again.

The problem is the national debt. Raising taxes will not pay off the national debt, no matter how many times you and your friends repeat it.

All of this is really pretty simple stuff, con. You have to be extraordinatly dense not to understand it.

[GOP-R--Con-Men]

Hillz,

Do you think tax cuts to the wealthy has created jobs?

[GOP-R--Con-Men]

Hillz,

Don't head for the hills to hide. C'mon the question requires only a YES or NO.

[fourvahl]

For the record, it was Richard Nixon the first and only US President that opened the doors to China in poorly negotiated trade deals which today 40 years later have destroyed millions of US jobs forever.

Tax cuts and trickle down economics don't work IMO. Republican's will have to figure out that the dollars of corporation contributions don't necessarily get you elected. Democrats too for that matter.

I am tired of politicians selling their soles to the highest bidder. :( They should be working for the middle class because we are what makes United States what it is.

I am tired of the political bickering between both parties. I am not in a swing state so I voted Independent.

[TimeToEvolve]

60% of the American people want to tax the people who can most afford it. So why should Obama compromise with Boner and his Wall Street handlers?

[hillzhaveays]

RepubliCon_Liar_RobMe replies:
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.
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HILLZAGAIN says:

"In actual fact, from 2004 to 2007, federal tax revenue increased by $780 billion. Doesn't sound like plummeting to me."

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LMAO!.... Actually, ignorant Republi-minion, the increase was $587 billion, not "$780 billion". Here's the data (subtract "2007" from "2004" revenues...

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G.W. BUSH BUDGET YEARS (2002-to-2009)
~ "ON-BUDGET" REVENUE GROWTH:
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YEAR ... ON-BUDGET REVENUE ... % GROWTH
2002 ... $1,337,815,000,000 ... -9.8%
2003 ... $1,258,472,000,000 ... -5.9% (Bush "Tax Cuts" implemented)
2004 ... $1,345,369,000,000 ... 6.9%
2005 ... $1,576,135,000,000 ... 17.2%
2006 ... $1,798,487,000,000 ... 14.1%
2007 ... $1,932,896,000,000 ... 7.5%
2008 ... $1,865,945,000,000 ... -3.5%
2009 ... $1,450,980,000,000 ... -22.2%
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Thank you shallow/republicon/spammer for graciously pointing out how well tax cuts work.

Your contention, however, that tax cuts only work for two years, then cause a plummet in revenue is rather dubious. In fact, it sounds like you just made that up, like the rest of your tripe.

Please cite your evidence that the drop in revenue from year 2007 on was due to the Bush tax cuts and specifically not to the crash caused by the banks, GOP, Democrats and stupid homeowners lying about their income.

[Maria0420]

Republican Congress= lemmings, political suicide.The can't compromise, it's their instinct. They will drown in their sea of intransigence and we will get new ones, willing to work for the country.

[hillzhaveays]

spammer, you yourself showed the revenue went up dramatically after the Bush tax cuts were implemented. Thanks for that.

You are wrong that they were responsible for the plummeting revenue from 2007 on. Had homeowners not lied about their income when buying houses leading up to late 2007, and had banks not allowed them to lie, we would be fine right now.