Obama warns GOP: No debt-ceil­ing fight

An­other top Repub­li­can sig­nals sup­port for tax hike.

Austin American-Statesman - - THE SECOND FRONT - By David espo BLOOMBERG

WASHINGTON — Pres­i­dent Barack Obama warned con­gres­sional Repub­li­cans on Wed­nes­day not to in­ject the threat of a government de­fault into com­plex fis­cal cliff ne­go­ti­a­tions aimed at avoid­ing year-end tax in­creases and spend­ing cuts that could harm the econ­omy.

“It’s not a game I will play,” de­clared Obama as Repub­li­cans strug­gled to find their foot­ing in talks with a re­cently re-elected pres­i­dent and uni­fied con­gres­sional Democrats.

Among the Repub­li­cans, Sen. Tom Coburn of Ok­la­homa be­came the lat­est to break ranks and say he could sup­port Obama’s de­mand for an in­crease in tax rates at up­per in­comes as part of a com­pre­hen­sive plan to cut fed­eral deficits.

House Ma­jor­ity Leader Eric Can­tor said Repub­li­cans want to “sit down with the pres­i­dent. We want to talk specifics.” He noted that the GOP had made a com­pro­mise of­fer ear­lier in the week and the White House had re­jected it.

Since then, nei­ther Obama nor con­gres­sional Democrats have sig­naled in­ter­est in ne­go­ti­a­tions that both sides say are es­sen­tial to a com­pro­mise. Pres­i­den­tial aides have even en­cour­aged spec­u­la­tion that Obama is will­ing to let the econ­omy go over the “fis­cal cliff” if nec­es­sary and gam­ble that the pub­lic blames Repub­li­cans for any fall­out.

Even­tu­ally, Democrats ac­knowl­edge, there will be com­pro­mise talks, pos­si­bly quite soon, to­ward an agree­ment that raises rev­enues, reins in Medi­care and other government ben­e­fit pro­grams, and per­haps raises the government’s $16.4 tril­lion bor­row­ing limit.

For now, the demon­stra­tion of pres­i­den­tial in­flex­i­bil­ity ap­pears de­signed to show that, un­like two years ago, Obama will refuse to sign leg­is­la­tion ex­tend­ing toprate tax cuts and also to al­low pub­lic and pri­vate pres­sure to build on the Repub­li­can lead­er­ship.

So far, the GOP has of­fered to sup­port non­spec­i­fied in­creases to raise tax rev­enues by $800 bil­lion over a decade but has re­jected Obama’s de­mand to let the top in­come tax rate rise from 35 per­cent to 39.6 per­cent.

To but­tress their case, Repub­li­can of­fi­cials in Congress pointed to numer­ous pro­pos­als that Obama has pre­vi­ously ad­vanced that could gen­er­ate the same amount of rev­enue he is seek­ing — with­out rais­ing rates. The list in­cludes lim­it­ing the tax de­duc­tions taken by up­per-in­come tax­pay­ers, rais­ing taxes on the oil and gas in­dus­try, and curb­ing or elim­i­nat­ing the de­ductibil­ity of tax­ex­empt bonds.

The “fis­cal cliff,” with its year-end dead­line, refers to in­creases that would af­fect ev­ery worker who pays fed­eral in­come tax, as well as spend­ing cuts that would be­gin to bite de­fense and domestic pro­grams alike.

Pres­i­dent Barack Obama tells mem­bers of the Busi­ness Roundtable in Washington on Wed­nes­day that the deficit dead­lock is hurt­ing the eco­nomic re­cov­ery.

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