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‘Fiscal cliff’ negotiations stall again on question of raising tax rates

  • Joseph Malloy III, left, and John Dodds, right, with the Philadelphia Unemployment Project demonstrated as Sen. Bob Casey, D-Pa., center, speaks during a news conference at the 30th Street Station Monday, Nov. 26, 2012, in Philadelphia. Casey announce a planned Joint Economic Committee hearing on the impending "fiscal cliff" of massive tax hikes and spending cuts to take effect in January if Congress doesn't head them off. (AP Photo/Matt Rourke)Joseph Malloy III, left, and John Dodds, right, with the Philadelphia Unemployment Project demonstrated as Sen. Bob Casey, D-Pa., center, speaks during a news conference at the 30th Street Station Monday, Nov. 26, 2012, in Philadelphia. Casey announce a planned Joint Economic Committee hearing on the impending "fiscal cliff" of massive tax hikes and spending cuts to take effect in January if Congress doesn't head them off. (AP Photo/Matt Rourke)
  • In a Wednesday, Nov. 7, 2012 file photo, President Barack Obama pauses as he speaks at the election night party at McCormick Place, in Chicago. President Barack Obama will make his first public comments Friday, Nov. 9, 2012 since the victory speech after his re-election, using his speech to set the tone for upcoming tense talks with congressional Republicans on avoiding the so-called "fiscal cliff" ó a combination of deep spending cuts and the expiration of Bush-era tax cuts that will take effect Jan. 1 and threaten to pull the country back into recession. (AP Photo/Carolyn Kaster, File)In a Wednesday, Nov. 7, 2012 file photo, President Barack Obama pauses as he speaks at the election night party at McCormick Place, in Chicago. President Barack Obama will make his first public comments Friday, Nov. 9, 2012 since the victory speech after his re-election, using his speech to set the tone for upcoming tense talks with congressional Republicans on avoiding the so-called "fiscal cliff" ó a combination of deep spending cuts and the expiration of Bush-era tax cuts that will take effect Jan. 1 and threaten to pull the country back into recession. (AP Photo/Carolyn Kaster, File)
  • Speaker of the House John Boehner, R-Ohio, talks about the elections and the unfinished business of Congress, at the Capitol in Washington, Wednesday, Nov. 7, 2012. The first post-election test of wills could start next week when Congress returns from its election recess to deal with unfinished business ó including a looming "fiscal cliff" of $400 billion in higher taxes and $100 billion in automatic cuts in military and domestic spending to take effect in January if Congress doesn't head them off. Economists warn that the combination could plunge the nation back into a recession. (AP Photo/J. Scott Applewhite)Speaker of the House John Boehner, R-Ohio, talks about the elections and the unfinished business of Congress, at the Capitol in Washington, Wednesday, Nov. 7, 2012. The first post-election test of wills could start next week when Congress returns from its election recess to deal with unfinished business ó including a looming "fiscal cliff" of $400 billion in higher taxes and $100 billion in automatic cuts in military and domestic spending to take effect in January if Congress doesn't head them off. Economists warn that the combination could plunge the nation back into a recession. (AP Photo/J. Scott Applewhite)
  • In this Oct. 25, 2012, file photo, Defense Secretary Leon Panetta speaks during a news conference with Joint Chiefs Chairman Gen. Martin Dempsey, not seen, at the Pentagon, in Washington. President Barack Obama and Congress have just a few weeks to figure out how to avert the automatic cuts to defense and domestic programs totaling $110 billion next year. Those reductions are part of the so-called fiscal cliff of expiring Bush-era tax cuts and the across-the-board cuts that Defense Secretary Leon Panetta has warned would be devastating to the military. (AP Photo/Carolyn Kaster, File)In this Oct. 25, 2012, file photo, Defense Secretary Leon Panetta speaks during a news conference with Joint Chiefs Chairman Gen. Martin Dempsey, not seen, at the Pentagon, in Washington. President Barack Obama and Congress have just a few weeks to figure out how to avert the automatic cuts to defense and domestic programs totaling $110 billion next year. Those reductions are part of the so-called fiscal cliff of expiring Bush-era tax cuts and the across-the-board cuts that Defense Secretary Leon Panetta has warned would be devastating to the military. (AP Photo/Carolyn Kaster, File)
  • Federal Reserve Chairman Ben Bernanke addresses a luncheon gathering of The Economic Club of New York, in New York,  Tuesday, Nov. 20, 2012.  Bernanke on Tuesday urged Congress and the Obama administration to strike a budget deal to avert tax increases and spending cuts that could trigger a recession next year. Without a deal, the measures known as the "fiscal cliff" will take effect in January. (AP Photo/Richard Drew)Federal Reserve Chairman Ben Bernanke addresses a luncheon gathering of The Economic Club of New York, in New York, Tuesday, Nov. 20, 2012. Bernanke on Tuesday urged Congress and the Obama administration to strike a budget deal to avert tax increases and spending cuts that could trigger a recession next year. Without a deal, the measures known as the "fiscal cliff" will take effect in January. (AP Photo/Richard Drew)
  • Sen. Robert P. Casey Jr., Pennsylvania Democrat (AP Photo/Matt Rourke)Sen. Robert P. Casey Jr., Pennsylvania Democrat (AP Photo/Matt Rourke)
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The talks between President Obama and congressional Republicans to avoid looming tax hikes and steep spending cuts regressed Monday to the same old sticking point — raising taxes on wealthier Americans.

Although both sides had expressed optimism before Thanksgiving that they would reach a deal to prevent a serious blow to the economy in January, the post-holiday pronouncements from the White House showed a re-emphasis on the president's position that tax rates must rise for families earning more than $250,000 per year. And some top Republican lawmakers again insisted they won't raise tax rates on anyone, arguing that enough revenue could be raised for deficit reduction by closing tax loopholes and limiting deductions.

"It's time for the president to present a plan that rises above these reckless and radical voices on the hard left, that goes beyond the talking points of the campaign trail, and that has a realistic chance of passing the Congress. The time for campaigning is over. It's time for the president to lead," Senate Minority Leader Mitch McConnell, Kentucky Republican.

With six weeks to go before the government reaches the so-called "fiscal cliff," Mr. Obama had no meetings with lawmakers Monday, and none was planned for the rest of the week. Instead, White House officials suggested Mr. Obama would continue to appeal to the public to pressure Congress to agree with his preferred approach.

And there was evidence Monday the president's approach may be working, as another Republican senator, Tennessee's Bob Corker, joined a group of lawmakers led by Sens. Lindsey Graham of South Carolina and Saxby Chambliss of Georgia who have distanced themselves from the "no new taxes" pledge promoted by Grover Norquist, president of Americans for Tax Reform.

White House press secretary Jay Carney said the movement by some Republicans on the anti-tax pledge is "welcome," and he said tax rates on the wealthy need to be raised to reach the target of $4 trillion of deficit reduction over 10 years.

"The president has made clear that he will not sign a bill that extends the Bush-era tax cuts for those making more than $250,000," Mr. Carney said. "That is a firm position. Math tells us that you can't get the kind of balanced approach that you need without having rates be part of the equation. We haven't seen a realistic proposal that achieves that."

That tone was markedly different from the comments by the president and others just after his re-election on Nov. 6, when Mr. Obama downplayed the notion of raising tax rates for the wealthy and said he was open to compromise on raising revenue from changes in loopholes and deductions, most of which would also come from wealthier taxpayers.

House Majority Leader Eric Cantor, Virginia Republican, said the White House still hasn't put a proposal on the table to address out-of-control spending as part of any deal.

"You could put taxes at 100 percent on the wealthy and not solve the problem of the spending," Mr. Cantor said on Fox News. "We have got to get to the problem and stop digging this hole in terms of spending money we don't have. You're running $1 trillion of deficit every year. The proposals we put on the table stop that. We're looking at the president to come forward with his ideas."

The White House instead presented a report Monday by its Council of Economic Advisers, warning of the impact on the economy if tax cuts are not extended for the middle class in January. The report said consumer spending could drop by nearly $200 billion in 2013, and growth of gross domestic product could be reduced by as much as 1.4 percentage points.

Mr. Carney brought Alan Krueger, the chief White House economist, with him to his daily press briefing to drive home the warning to lawmakers and to the public. Mr. Krueger said that going over the fiscal cliff would hurt virtually all sectors of the economy.

"Evidence like this is one reason why retailers are so concerned that Congress has not yet extended the middle-class tax cuts," he said.

The Democrat-led Senate has approved a bill that would extend tax cuts for families earning less than $250,000 per year, and the Republican-controlled House has approved a bill extending tax cuts for everyone.

In addition to such pressure from the White House for the Senate's proposal, the Service Employees International Union said more than 200 members and local leaders from several labor unions in 22 states will visit the Capitol on Wednesday to lobby lawmakers "to put jobs before cuts in the current debate over how to avoid going over the fiscal cliff."

As the debate intensified, Mr. Obama was undercut somewhat by a wealthy ally, billionaire investor Warren Buffett. Mr. Buffett, who supports raising taxes on people such as himself, broke with the White House by writing in an op-ed in The New York Times that everyone who makes under $500,000 should continue to pay the lower tax rates enacted under President George W. Bush.

"Let's forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital-gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities," Mr. Buffett wrote.

Mr. Carney said Republicans' discussion of raising substantial revenue through closing loopholes and limiting tax deductions "is not necessarily realistic."

"I think there's a growing consensus ... that we have to do this in a balanced way, and that revenue has to be part of it," Mr. Carney said.

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