Democrats and Republicans remained as far apart as ever last night as they attempted to forge a deal that would avert a potentially devastating series of tax hikes and spending cuts.
President Barack Obama is refusing to budge on his demand that a greater burden should fall on higher earners. In his first television interview since winning re-election, the President said that the latest Republican plan to stop the country going off the “fiscal cliff” of more than $600bn in automatic tax rises and spending reductions was “still out of balance”.
It didn’t go far enough and wouldn’t bring in the revenues needed to cut the deficit by $4 trillion over the next decade, he claimed.
“We’re going to have to see the rates on the top 2 per cent go and – we’re not going to get a deal without it,” he said, speaking to Bloomberg Television. Acknowledging the need for compromise, Mr Obama signalled a willingness to accept more in the way of cuts to government entitlement programmes.
But he refused to show any flexibility on the question of tax hikes for those earning more than $250,000 a year. “We’re going to have to have higher rates for the wealthiest,” he said. “It’s just a matter of math.”
While reassuring the county that “we have the potential of getting a deal done,” he reiterated his opposition to raising revenues just by overhauling the tax code – a key plank of the latest plan put forward by Congressional Republicans on Monday.
In a letter to the White House, they proposed raising some $800bn in new revenues – around half of what the President has proposed – by revamping the tax code. But they continued to resist higher taxes for the wealthy. Instead, Republicans led by the Speaker of the House of Representatives, John Boehner, proposed dropping deductions for high earners.
Their plan also envisaged a $600bn cut from government health programmes. Among the signatories to the letter was Paul Ryan, Mitt Romney’s running mate during his ill-fated run for the presidency, and a key opponent of tax hikes. But no sooner had the letter been dispatched than the White House retorted with a sharp dismissal.