Obama holds onto "revenue" caveat in averting "fiscal cliff"

Repurposing their respective arguments from Friday's round of press conferences, President Obama and House Speaker John Boehner, R-Ohio, in this week's addresses made their cases for and against extending tax cuts for the wealthiest two percent of Americans, with a view to avoid the so-called "fiscal cliff" at year's end.

For his part, the president pointed at his reelection victory Tuesday as a message "loud and clear" that Americans "won't tolerate dysfunction, or politicians who see 'compromise' as a dirty word - not when so many of your families are struggling."

On Friday, Mr. Obama said that while he's "open to compromise," he won't allow a deal to go through that extends the Bush-era tax cuts - set to expire at the end of the year - for the top two percent of high-income families. Both parties are scrambling to arrange a bargain before a series of tax increases and spending cuts go into effect Jan. 1, potentially hurling the United States into another recession. 

"At the end of this year, we face a series of deadlines that require us to make major decisions about how to pay down our deficit - decisions that will have a huge impact on the economy and the middle class, now and in the future," the president said. "Last year, I worked with Democrats and Republicans to cut a trillion dollars' worth of spending, and I intend to work with both parties to do more.

• Obama, Boehner head for stalemate on tax cuts
• Post-election, new hope for immigration reform

"But as I said over and over again on the campaign trail... 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 continued. "That's how we did it when Bill Clinton was president. And that's the only way we can afford to invest in education and job training and manufacturing - all the ingredients of a strong middle class and a strong economy."

The same budget battle in 2011 that eventually led to $1 trillion in cuts also brought the government within minutes of shutting down. On Tuesday, voters elected the same legislative makeup - a split Congress and Democratic White House - that has struggled over the president's term to break free of partisan gridlock and move budget legislation.

While insisting he's "open to compromise and new ideas," and said he's invited leaders of both parties to the White House to discuss solutions next week, the president issued a caveat: "I refuse to accept any approach that isn't balanced," he said. "I will not ask students or seniors or middle-class families to pay down the entire deficit while people making over $250,000 aren't asked to pay a dime more in taxes.

"This was a central question in the election," he continued, "and on Tuesday, we found out that the majority of Americans agree with my approach - that includes Democrats, Independents, and Republicans."

But delivering the Republicans' weekly response, Boehner, too, recycled his gist from Friday's press conferences, arguing that allowing the top two rates to rise would be letting "our nation's economy go off part of the fiscal cliff in January."

Democrats "believe that doing that will generate more revenue for the federal government - but here's the problem with that," the House Speaker said. "Raising those rates on January 1 would, according to the independent firm Ernst & Young, destroy 700,000 American jobs. That's because many of those hit by this tax increase are small business owners - the very people who are the key to job creation in America. I used to be one of them. 

"This week, I offered congratulations to President Obama, along with an alternative to sending our economy over any part of the fiscal cliff," he continued. The pillars of his own framework, Boehner explained, include tax reform "that closes special interest loopholes and lowers tax rates," entitlement reform, and a rejection of "arbitrary" national defense cuts.

"A stronger economy means more revenue - which is exactly what the president is seeking," he said, adding that a brief conversation with Mr. Obama this week left him "hopeful that we can continue those talks and forge an agreement that can pass both chambers of Congress."

[rqtguru]

Good leadin to say OK to allow the tax breaks to those in the top 2% that create jobs, but proportionate to the number of jobs created and maintained! Those of the top 2% who do not contribute to job creation the bush tax cuts will expire! To many of the top 2% they just get a bonus for having wealth! How can the GOP refuse that after his reasoning statement today!

[sjc_1]

The wealthiest 2% do NOT create jobs, this had been shown by a recent CBO study. The money goes into hedge funds investing in other countries. The hedge funds loan shark to struggling companies in the U.S.

[Billybergh]

During the 2011 budget talks with the Tea Party congress, President Obama declared, "I will stake my presidency on this issue of tax fairness." Tax fairness is a matter of rate under the law established by the principle that those who benefit most from our commons owe the most in support of it.

[Billybergh]

The rate is what matters. The very rich avoid paying taxes while they are responsible for the recession that has impoverished our people. It's time they payed their fare share and made up for the harm their voodoo economics has caused. The massive tax cuts under Reagan and Bush coupled with the massive off-shoring of American manufacturing jobs along with the deregulation of the banks brought on this massive recession. Immense amounts of capital (the wealth of America) sits un-used in the pockets of the the top 2% of tax-payers--who duck those rates the way Romney did and are paying about 15%, not the 36% they should pay, down from the 70% top rate that existed when Reagan took office. The "Supply Side" command economy has failed. We need to get money into the hands of people who will spend it here at home and not rat-hole it in the Cayman Islands.

[sandiegopete]

I have been watching 60 minutes and want to add to my previous comment since I can't find the Ben Bernanke story anywhere on this site.

Bernanke has a lot of nerve commenting on the crash of 2008. By 2007 debt held by financial companies grew to $36 trillion, equal to 270% of GDP.(The Financial Crisis Inquiry Report)

Bernanke as head of the Federal Reserve had an obligation to ensure that our banks had sufficient capital to cover depositors' demand deposits. Capitalizing credit default swaps can by no definition be characterized as "capital" for the purposes of meeting capital requirements. Bernanke, as a member of the Federal Reserve Board from 2002 to 2005 certainly know that.

Of course, attention should not be taken away from the fallen Saint Alan Greenspan who most certainly knew or should have known that banks cannot classify credit default swaps as capital unless the source of the funds was established. There was no evidence that insurance companies like AIG posted any loss reserve for potential subprime loan defaults. Greenspan should have been concerned by the amount of bank debt debt that had accrued during his chairmanship.

[sandiegopete]

Here in California our people voted to increase taxes on themselves because they understand that in order to compete in today's global marketplace you need to have an educated populace. Yet we see the United States being held back by people in states like Kentucky, Mississippi, Alabama and the Carolinas trying prevent the tax increases that are certainly necessary to not only reduce our national debt but to also regain our leadership in education.

California is the 7th largest economy in the world. Why should we be held back because puny states like Kentucky, North Carolina and South Carolina want to drag us back into 1901? I say, let California go. Let us create our own nation. We are tired of subsidizing states like Idaho, Montana, South Dakota, Mississippi, Alabama, Kentucky, and Alaska who suck our tax dollars away and then spit in our faces.

[yutubenut]

Obama has no more a "mandate" than GWB did, Obama got 2-3% more of the popular vote than Romney. Not a landslide or a mandate Bush did not have a mandate either. Obama did win, no doubt, but it was NO Regan landslide victory. Let's do the cliff! This is the only way to get both parties to cut spending. Its impact is being over hyped. Both sides are protecting ideology. If Obama doesn't get a tax increase for the "rich", only spending cuts, and the economy recovers, it will forever discredited the democrats that taxing is the way out of any economic problem. If republicans give in and allow even a tiny tax increase on the "rich", along with spending cuts, and the economy recovers, the democrats will forever claim that it was tax increases and not spending cuts that ended the recession, and taxes are the way out of any economic problem.

[ThomasSense]

Paul Krugman, a Nobel economist, has been saying we are in a liquidity trap. This is how I interpret that. People and businesses aren't spending money because they are scared of the future.
If Congress would actually do some work, it would help. Congress needs to raise taxes on the wealthy, and spend that money to fund rebuilding the infrastructure. Employed people spend money which allows businesses to employ people to meet the demand. Money starts to circulate from one person to another.

[hillzagain]

They've already told how much they'd expect to get from the tax hike on the wealthy. It would amount to enough revenue in one year to run the country for about 8 hours.

Perhaps you could identify for us exactly how much you would like to raise taxes on the wealthy? It is a known fact, which you can verify at the IRS, that the top 10% already pay 70% of Federal Revenue from individual filers.

So, the question is, if you don't feel that 7 dollars out of ever 10 given to the government by the wealthy isn't "fair", what is fair?

Be specific.

[luadda22]

Thomas, if you are paying attention to Krugman, you have a big problem to begin with.

[realsickofit]

It looks like HUD would be a good place to save some money, the local housing authority with HUD money built an apartment complex here that has 1 and 2 bedroom apartments that cost $200,000 each, when you can buy a new 2 bedroom private home in a gated community for $150,000. Looks to me like they don't care what they spend when it's tax

[hypnotoad72]

$200k for an apartment?!! Holy moley! I wonder who the target market is... it's not you or me...

[ThomasSense]

Yesterday, you were saying that nonunion linemen were being turned back from helping New York. That was incorrect. So, I don't know if I can believe this statement.

[inbethlehem]

I do wish somebody would explain how raising taxes a little on the top 2% will hurt small business. Seems to me that if you own a small business, a good way to reduce your taxes would be to ADD workers. These are expenses which would be deductable and would LOWER your tax rate.

[realsickofit]

Add worker that you don't need?? You can do the same thing, have your yard cut twice a week when it needs it only once, have your dry cleaning done over even if it doesn't need it.

[hypnotoad72]

As automation (and offshoring) continue, there is only one logical conclusion...

The system, as it's being redefined, is not working for the working class. When work isn't rewarded, that's where you end up with people on food stamps and on the street. All the media (in general) likes to report are "Low cost ____", "unpaid jobs are the new normal", etc...

[RobertVBrand]

Actually, the "fiscal cliff" is just the idea that the mass media uses to generate viewership/readership, now that the election is over with. There is no "liberal" media, only a self-serving media that cares only for high
ratings/circulation.