Obama comes out fighting for tax on rich

Pressure mounts on President to strike a deal with Republicans to avert the 'fiscal cliff'

Washington DC

President Barack Obama was back in campaign mode last night, telling an audience of car workers in Michigan that he “won't compromise” on his stipulation that any deficit-busting deal he strikes with Republicans on Capitol Hill to avert the looming “fiscal cliff” must include a tax hike for the rich.

Pressure is rising on both sides to end their stand-off and start moving towards a compromise deal or face the automatic triggering at year's end of significant income-tax increases for almost all Americans as well as a swath of deep spending cuts, which together could amount to about $600bn.

His hand strengthened by his lopsided win over Mitt Romney in November, Mr Obama used his visit to a heavy-lorry plant outside Detroit to press his demand that Congress act to raise tax rates on families earning more than $250,000 a year – or single people earning more than $200,000 – while extending tax breaks in place for almost a decade already for most middle-class earners.

Hopes were raised for a possible end to the deadlock when Mr Obama held first face-to-face talks with Republican leader John Boehner, the Speaker of the House, on Sunday. No details of their discussion were released, however, leaving little clue as to whether any progress had been made. On Friday, Mr Boehner publicly castigated the President, saying he had "wasted another week".

While both men are keeping their respective camps on Capitol Hill up to date, they alone in the coming days must find a way to an accord if the automatic tax increases and spending cuts – the "fiscal cliff" – are not to come about. Economists have warned that if they fail, the impact on those adjustments on the economy could be enough to push the US back into recession some time in 2013.

Business leaders are urging politicians to settle their differences and do a deal. "The millions of people who work for us, their lives are in flux. And this is incredibly critical we get this done now," Jeffrey Immelt, the chief executive of General Electric and head of the President's advisory council on competitiveness, said yesterday. "Everyone knows we need revenue," in addition to cuts in spending, he added.

The days ahead promise to be especially tricky for Mr Boehner. He outraged some on the right flank of his party last week by suggesting he would agree to table $800bn in additional tax revenue for the government over 10 years, achievable mostly by closing deductions and loopholes in the system. But that did not go far enough to meet Mr Obama's demand that actual tax rates be raised on the rich.

Bit by bit, however, Republican unity seems to be cracking, with some senior members of the party beginning to concede that it may be wiser to relent on the tax issue and give in to raising taxes on the wealthy. Polls suggest that most Americans agree with the President.

"There is a growing group of folks looking at this and realising that we don't have a lot of cards as it relates to the tax issue before year-end," Senator Bob Corker, a Republican from Tennessee, commented. He and other more moderate Republicans hope that they would then be in a stronger position to demand deeper social-spending cuts as part of an overall deficit-reduction package.

"The focus then shifts to entitlements, and maybe it puts in a place where we actually can do something that really saves the nation," Senator Corker said.

Striking a deal: the sticking points


If no agreement is reached, tax cuts instituted by George Bush will expire for almost all American earners. Most Republicans are fiercely opposed to a tax increase of any kind. But Mr Obama says he will not extend any unless they agree to end the tax breaks for the wealthy.


This is the enormous burden on the budget represented by social safety net programmes such as Medicaid and Medicare. The Republicans want seep cuts, which is anathema to most of Mr Obama's party.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Senior Accounts Assistant - Accounts Payable - St. Albans

£26000 - £28000 per annum + benefits : Ashdown Group: Senior Accounts Assistan...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions