WASHINGTON -- President Obama used his post-election news conference to pressure House Republicans to extend expiring tax rates for middle-class Americans – avoiding massive tax hikes in the New Year that he said could put a damper on the holiday shopping season.
Halting class tax hikes for 98% of Americans would ease the threat of the coming "fiscal cliff" – the year-end confluence of automatic tax hikes and spending cuts that Washington is now desperately trying to stop.
“We could get that done by next week,” Obama said.
Obama warned Republicans not to hold the middle-class tax cuts “hostage” as the debate continues over taxes for upper-income Americans. If both sides resist compromise, he said, “we can all imagine a scenario when we go off the fiscal cliff.”
Congressional Republicans have dismissed the president’s approach as incremental as they press for a comprehensive bill that would keep tax rates low -- or lower -- for all Americans, including those who earn incomes above $200,000, or $250,000 for couples, who Obama has said should pay more.
Quiz: How much do you know about the "fiscal cliff"?
House Speaker John A. Boehner (R-Ohio) has made an opening offer that would extend all of the expiring tax rates for another year while Congress and the White House work on a broader overhaul of the tax code, with the goal of closing loopholes and using the revenue to lower all tax rates.
The White House has been cool to Boehner’s offer even as the president said Wednesday he remains open to new ideas.
“I don’t expect the Republicans to simply adopt my budget,” the president said. “When it comes to the top 2%, what I’m not going to do is extend further a tax cut for folks who don’t need it.”
Obama has invited congressional leaders to the White House on Friday to begin talks on the looming budget battle.
One idea circulating is to maintain the existing tax rates, as Republicans prefer, but capping deductions for upper-income households as a way to produce more revenue.
As talks begin, the White House appears to have begun a strategy that aims to isolate House Republicans as standing in the way of the tax break for the middle class. The Senate has already passed a bill that would extend the tax rates for the middle class. Without action, tax rates would rise on most Americans on Jan. 1, a tax hike that would ripple through the economy.
At the same time, massive spending cuts are scheduled to begin – the result of a previous deficit-reduction bill that both sides had previously agreed to, but now want to amend. Halting those cuts are also part of the talks.
Economists say the combined fiscal contraction of tax hikes and spending cuts could send the economy into another recession.
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