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
Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
Sport
football
Life and Style
Agretti is often compared to its relative, samphire, though is closer in taste to spinach
food + drink
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
News
Kelly Osbourne will play a flight attendant in Sharknado 2
people
News
Down-to-earth: Winstone isn't one for considering his 'legacy'
people
News
The dress can be seen in different colours
i100
Sport
Wes Brown is sent-off
football
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
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

Recruitment Genius: Bookkeeper / Office Co-ordinator

£9 per hour: Recruitment Genius: This role is based within a small family run ...

Recruitment Genius: Designer - Print & Digital

£28000 - £32000 per annum: Recruitment Genius: This Design and marketing agenc...

Recruitment Genius: Quantity Surveyor

£46000 per annum: Recruitment Genius: This property investment firm are lookin...

Recruitment Genius: Telesales / Telemarketing Executive - OTE £30k / £35k plus

£18000 - £35000 per annum: Recruitment Genius: This company specialises provid...

Day In a Page

War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003
Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

Our woman in Beijing builds a new relationship

Britain's first female ambassador to China intends to forge strong links with growing economic power
Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

Courage is rare. True humility is even rarer

Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

Alexander McQueen's astonishing vision

Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

Dinner through the decades

A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

Philippa Perry interview

The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

Bill Granger's Indonesian stir-fry recipes

Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

Harry Kane interview

The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
The Last Word: For the good of the game: why on earth don’t we leave Fifa?

Michael Calvin's Last Word

For the good of the game: why on earth don’t we leave Fifa?
HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

Scientists hail daily pill that protects against HIV infection

Breakthrough in battle against global scourge – but will the NHS pay for it?