As President Barack Obama and congressional leaders prepared for budget and tax talks on Friday aimed at preventing the US economy from falling back into recession, a top Republican vowed to overhaul the US tax code next year.
Democrats and Republicans dug in on their long-held opposing positions on the eve of the talks, with Senate Republican leader Mitch McConnell warning, “What we won’t do is raise tax rates.”
But raising income taxes on the wealthy to help shrink the deficit was exactly what Obama highlighted during his first post-election news conference on Wednesday. Twenty-four hours later, Obama spokesman Jay Carney argued that public sentiment was firmly behind the newly re-elected president.
Obama “will not sign, under any circumstances, an extension of tax cuts for the top 2% of American earners,” Carney told reporters aboard Air Force One en route to New York to survey recent devastating storm damage.
Later on Thursday, Republican Dave Camp, the chairman of the tax-writing Ways and Means Committee of the US House of Representatives, said his panel will move to overhaul the US tax code next year.
The panel “will write, act on and pass comprehensive tax reform legislation in 2013,” Camp said in the text of a speech to be delivered in the evening. “We intend to move a comprehensive tax reform bill in 2013 — no matter what.”
McConnell, Senate Majority Leader Harry Reid, House of Representatives Speaker John Boehner and House Democratic leader Nancy Pelosi are scheduled to talk with him for about an hour at the White House. “Let us go to the table in good faith that we want something to happen,” Pelosi told reporters, adding, “If nothing happens, the consequences will be great.”
While all five leaders have registered the need for cooperation after Democrats scored a healthy win in last week’s elections, all signs point to difficult negotiations on how to avoid the “fiscal cliff” on January 1.
That is when about $600 billion worth of broad tax increases and deep spending cuts occur if Congress cannot decide how to replace them with less extreme deficit-reduction measures. The overall push for fiscal responsibility is being fueled by budget deficits that have topped $1 trillion for each of the past four years, pushing the country's debt beyond the $16 trillion mark.
Uncertainty about the fiscal cliff prompted analysts this month to cut early 2013 US economic growth expectations, a Reuters poll showed on Thursday.