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

Taxation

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.

Entitlements

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
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Life and Style
Suited and booted in the Lanvin show at the Paris menswear collections
fashionParis Fashion Week
Arts and Entertainment
Kara Tointon and Jeremy Piven star in Mr Selfridge
tvActress Kara Tointon on what to expect from Series 3
Voices
Winston Churchill, then prime minister, outside No 10 in June 1943
voicesA C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
News
i100
News
An asteroid is set to pass so close to Earth it will be visible with binoculars
news
Arts and Entertainment
Benedict Cumberbatch has spoken about the lack of opportunities for black British actors in the UK
film
News
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Austen Lloyd: Private Client Solicitor - Oxford

Excellent Salary : Austen Lloyd: OXFORD - REGIONAL FIRM - An excellent opportu...

Austen Lloyd: Clinical Negligence Associate / Partner - Bristol

Super Package: Austen Lloyd: BRISTOL - SENIOR CLINICAL NEGLIGENCE - An outstan...

Recruitment Genius: Sales Consultant - Solar Energy - OTE £50,000

£15000 - £50000 per annum: Recruitment Genius: Fantastic opportunities are ava...

Recruitment Genius: Compute Engineer

Negotiable: Recruitment Genius: A Compute Engineer is required to join a globa...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project