Obama ups campaign on fiscal cliff

2012-11-28 10:29
US President Barack Obama speaks during a press conference at the White House in Washington, DC. (File, AFP)

US President Barack Obama speaks during a press conference at the White House in Washington, DC. (File, AFP)

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Washington - So much for the misty eyed, pre-election nostalgia over President Barack Obama's last-ever campaign.

A few weeks on, the re-elected US leader is dusting off just retired retail politics skills, hoping to outflank Republicans over the "fiscal cliff" - an impasse over tax hikes and spending cuts that threatens to trigger a recession.

The president is pushing to extend income tax cuts due to expire on 1 January for middle class Americans - but to allow rates for the rich to rise, an approach fervently opposed by Republicans in Congress.

Obama met small business owners at the White House on Tuesday and will talk to middle class families in the presidential mansion on Wednesday, before huddling with top CEOs - a group with which he has had a testy relationship.

Among business chieftains expected as Obama expands his political push is Lloyd Blankfein, CEO of investment giant Goldman Sachs, and Yahoo! chief executive Marissa Mayer.

Then, on Friday, Obama will head to Pennsylvania, on his first politically themed out-of-town event since beating Republican Mitt Romney on 6 November, to make remarks at a local business on the need for middle class tax relief.

Sour reactions

The president's political machine, with its millions of supporters linked by social media, has also been mobilised with an email sent out last week explaining Obama's approach to the crisis.

But Obama's sworn Republican foes have reacted sourly as the rivals wage their first key clash since the election, which could have an enormous impact on the way power shakes down in Washington during his second term.

"Rather than sitting down with lawmakers of both parties and working out an agreement, he's back out on the campaign trail, presumably with the same old talking points we're all familiar with," said Senate Republican minority leader Mitch McConnell.

"Look: We already know the president is a very good campaigner. What we don't know is whether he has the leadership qualities necessary to lead his party to a bipartisan agreement on a big issue likes this."

The White House, more used to charges that Obama as president has been negligent in stroking various interest groups in pursuit of passing legislation, dismisses charges of grubby political manoeuvring.

"This is not about politics," White House spokesperson Jay Carney insisted, arguing that although Obama will never face voters again, he was right to engage people on a crucial issue.

Fresh shock for economy

"I think it's very important to continue that conversation with the American people, both for the president, and for members of Congress."

If there is no compromise, tax cuts enacted by former president George W Bush would expire at the end of the year, and taxes on all Americans would rise, in a fresh shock for the fragile US and global economies.

Businesses are even worried that the prospect of tax hikes could spook consumers over the Christmas holiday season and hit spending.

The year-end deadline is the result of legislation passed when Republicans and Democrats failed to reach a previous long-term deficit and budget deal, and was meant to concentrate minds of lawmakers and spur compromise.

Obama campaigned on a platform of raising taxes on individuals who make more than $200 000 per year and families that rake in more than $250 000, as a way of raising extra revenue to tame the deficit.

Republicans insist that raising taxes on the wealthy would be counter-productive, would hurt small business owners, and would slow economic growth and dampen job creation.

Little concrete progress

The parties are also feuding about where to cut expenditures, with some Republicans opposed to any trimming of the military budget and Democrats guarding social safety net entitlement programs.

Obama held preliminary talks with congressional leaders on averting the so-called "fiscal cliff" after the election, and talked to Republican House speaker John Boehner on the issue at the weekend.

So far, there seems little concrete progress, in what seems to be a period of posturing and political brinkmanship before the year-end deadline enforces serious bargaining next month.

But there are signs that some lawmakers have started to wriggle loose from a vaunted pledge, signed by hundreds of Republicans and enforced by powerful conservative advocate Grover Norquist, never to vote for any kind of tax hike.

Some Republicans have indicated they may be open to bringing in more tax revenue from the wealthy with an overhaul of the tax code designed to close special interest loopholes, rather than by raising marginal rates.

Obama has meanwhile warned that he will not tolerate any plan that involves the most well-off Americans escaping higher taxes, threatening to wield his presidential veto.

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