President Obama returns to the White House on Thursday after from a trip to New York City to view storm damage from Sandy.(Photo: Toby Jorrin, AFP/Getty Images)
WASHINGTON -- President Obama is kicking off budget dealings with
congressional leaders with new leverage from last week's big win, but
he confronts a decidedly tricky path to avoiding a market-rattling
"fiscal cliff" that could imperil a still-fragile economy.
GOP rivals promise greater flexibility on new tax revenues, but
Democrats face pressure from liberal interest groups urging the
president to take a hard line and avoid cutting big benefit programs
like Medicare and food stamps. It's up to Obama to navigate the course
toward an agreement.
At issue is a one-two punch of expiring
Bush-era tax reductions and across-the-board spending cuts set to hit in
January as punishment for the failure of a gridlocked Congress to reach
a deficit-cutting deal last year. Economists and business leaders warn
the combination could send the economy back into recession, and all
sides in Washington say they want to avoid going over the cliff.
the meeting with Obama are the top four leaders of Congress: House
Speaker John Boehner, R-Ohio, Minority Leader Nancy Pelosi, D-Calif.,
Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch
The White House says Obama's starting point for
negotiations is his February budget plan, which combined $1.6 trillion
in new revenues over the coming decade - chiefly from upper-income
earners - with modest cuts to benefits programs. Obama's plan promises
$4.4 trillion in deficit cuts over 10 years, but more than half of that
comes by banking already accomplished cuts and questionable savings from
winding down military operations in Iraq and Afghanistan.
the run-up to the meeting, Obama has been firm that taxes are going up
on upper-bracket earners, though Boehner and McConnell are adamant that
his campaign promise of raising the top income tax rate on family income
exceeding $250,000 a year is a nonstarter.
"When it comes to the
top 2%, what I'm not going to do is to extend further a tax cut for
folks who don't need it," Obama said at his news conference Wednesday.
will press the leaders to make sure that taxes don't go up on 98% of
American families and 97% of small businesses at the end of the year.
The White House says Obama is willing to compromise on a
deficit-reduction plan, but only if it asks for more revenues from
The bargaining landscape has shifted markedly
in Obama's favor since his failed talks with Boehner in the summer of
2011 on a "grand bargain" on the budget. Then, Obama squared off against
a tea party-driven House on the need to extend the government's ability
to borrow to avoid a market-crunching first-ever default on its
Now, freshly re-elected, Obama is putting Republicans
on notice that he's willing to mount a national campaign blaming them
for holding up renewing tax cuts for all with an ultimatum about
renewing tax cuts for upper-income earners.
"If you have looked
closely at what the president had to say and looked closely at what I
have had to say, you know, there are no barriers here to sitting down
and beginning to work through this process," Boehner said Wednesday.
McConnell, however, has adopted a harsher tone.
roadblocks to a deal may come from Obama's left flank as much as they
do from his conservative GOP rivals. Liberal Democrats are adamant that
the measure not touch Social Security or raise the eligibility age for
Medicare. Both ideas were in the mix when Obama negotiated with Boehner
last summer, but top Senate Democrat Reid insists that ideas like a
lower inflation adjustment for Social Security are off the table now.
Friday afternoon, Obama will continue his efforts to build a coalition
of support for his position when he and Vice President Joe Biden meet
with leaders of civil rights and other organizations. The president has
already met with leaders of labor and liberal organizations as well as
corporate CEOs who have backed his call for greater tax revenue.