Obama pushes tax agenda, Congress in stand-off

The Pak Banker - - Front Page -


Pres­i­dent Barack Obama on Tues­day has launched a pub­lic re­la­tions push for his bid to raise taxes on wealthy Amer­i­cans, but U.S. law­mak­ers re­mained dead­locked over dra­matic, year-end tax in­creases and spend­ing cuts known as the "fis­cal cliff."

At the White House, small busi­ness lead­ers emerged from a one-hour meet­ing with Obama to voice sup­port for his goal of ex­tend­ing low tax rates for the mid­dle class be­yond the end of the year, while let­ting rates rise for wealth­ier tax­pay­ers. The busi­ness own­ers urged Obama "to fight to keep the mid­dle-class tax cuts," said Lew Prince, co-founder of Vin­tage Vinyl, an in­de­pen­dent mu­sic store in St. Louis, Mo.

"What grows jobs in Amer­ica is con­sumers spend­ing money, and the av­er­age per­son needs that two or three thou­sand dol­lars a year in his pocket to help drive the econ­omy," Prince told re­porters at the White House.

Repub­li­cans want to ex­tend low tax rates - en­acted a decade ago un­der the ad­min­is­tra­tion of former Repub­li­can Pres­i­dent Ge­orge W. Bush - for all tax­pay­ers, in­clud­ing house­holds earn­ing more than $250,000 a year.

Rais­ing tax rates on the wealthy would dis­cour­age in­vest­ment and hir­ing at a time of high un­em­ploy­ment, Repub­li­cans say.

Con­gres­sional Democrats al­lied with the pres­i­dent showed no sign of back­ing down from his stance on rais­ing taxes for the wealthy. But both sides have soft­ened on some long-held po­si­tions: Repub­li­cans have been show­ing a will­ing­ness to con­sider new rev­enue in­creases while Democrats have re­laxed their hard line against new sav­ings to the costly government-run Medi­care and Med­i­caid health­care pro­grams.

With just a month left be­fore the Bush tax cuts ex­pire and au­to­matic spend­ing cuts be­gin to take hold, mar­kets were anx­ious about pre­dic­tions that fall­ing off the "fis­cal cliff" could trig­ger an­other re­ces­sion.

"There re­mains no clar­ity on the ul­ti­mate sta­tus on the Bush tax cuts, which have to be re­solved be­fore you can move for­ward with the re­main­der of the fis­cal cliff," said Chris Krueger, an an­a­lyst at Guggen­heim Se­cu­ri­ties' Washington Re­search Group.

Stock prices de­clined mod­estly de­spite government re­ports that planned U.S. busi­ness spend­ing rose again in Oc­to­ber and that sin­gle-fam­ily home prices rose again in Septem­ber. De­spite a mild sell-off in stocks, the Dow Jones in­dus­trial av­er­age closed at about 12,878, up 14 per­cent from a year ago.

Brian Gard­ner, an an­a­lyst at fi­nan­cial firm Keefe Bruyette & Woods, said a lim­ited deal would likely be struck to avert the fis­cal cliff, with larger fis­cal is­sues pushed into 2013.

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