By Jim Kunhenn/The Associated Press
HATFIELD, Pa. — President Barack Obama argued Friday that allowing taxes to rise for the middle class would amount to a “lump of coal” for Christmas, while Republican House Speaker John Boehner declared that negotiations to surmount a looming fiscal cliff are going “almost nowhere.”
Obama took his case to an audience in a Philadelphia suburb, saying that this move would present a “Scrooge Christmas” for millions of wage-earners. Speaking at a toy factory, the president said Republicans should extend existing Bush-era tax rates for households earning $250,000 or less, while allowing increases to kick in for the wealthy.
On Capitol Hill, Boehner argued that Obama’s latest offer — to raise revenue by $1.6 trillion over the next decade — would be a “crippling blow” to an economy that is still struggling to find its footing. The Ohio Republican told reporters he would continue working with Obama to avoid hundreds of billions in tax increases and spending cuts that will take effect beginning in January if Washington doesn’t act to stop it, but gave a gloomy assessment of the talks so far.
“There’s a stalemate. Let’s not kid ourselves,” Boehner said. “Right now, we’re almost nowhere.”
Obama’s speech came a day after his administration proposed nearly $1.6 trillion in new tax revenue over 10 years, $600 billion in savings from changes in mandatory spending programs including Medicare, and $200 billion in spending ranging from public works projects to help for the unemployed and struggling homeowners, according to administration officials.
Republicans rejected the offer as unreasonable. Republicans have said they are open to new tax revenue but not higher rates.
Obama said he believed both parties “can and will work together” to reach an agreement to get its long-term deficit under control “in a way that’s balanced and is fair.”
Obama spoke at the Rodon Group manufacturing facility, showcasing the company as an example of a business that depends on middle-class consumers during the holiday season. The company manufactures parts for K’NEX Brands, a construction toy company whose products include Tinkertoy, K’NEX Building Sets and Angry Birds Building Sets. The road trip was part of a dual White House strategy of having the president’s team meet with members of Congress while Obama travels the country to pressure Congress to act.
The president joked that he’s keeping his own “naughty and nice list” for members of Congress — and only some would get a K’NEX set for Christmas.
Administration officials said the White House offer, presented to Hill Republicans by Treasury Secretary Tim Geithner, constituted much of what Obama has previously suggested in budget proposals and during the campaign.
Under the administration’s plan, the new tax revenue would include $950 billion generated by raising taxes on families with incomes over $250,000 and by closing certain tax loopholes. The remainder would be achieved through an overhaul of the tax system next year and would not become effective until 2014.
The proposal, which the administration has also described to business and labor leaders, would require Congress and the White House to identify a “down payment” of cuts and tax loophole closings by the end of this year that would buy Congress and the president time to negotiate a tax overhaul and changes in entitlement programs between now and Aug. 1.
One new feature in the Geithner plan is a call for increasing the nation’s debt limit without the need for congressional approval. Under last year’s debt ceiling deal, Obama simply had to notify Congress that he was raising the debt ceiling, a move that could be blocked only if both houses of Congress passed resolutions of disapproval that Obama could veto. The administration wants a permanent extension of the debt ceiling with a similar legislative arrangement and with no offsetting spending cuts, as demanded by Republicans.
One administration official said Obama’s must-have positions are expirations of the Bush era tax cuts for high earners and the inclusion of the debt limit in the deal. The officials spoke on the condition of anonymity because he was not authorized to describe publicly the state of negotiations.
By counting $1 trillion in spending cuts agreed to last year, claiming $800 billion saved this year and over the next decade because of troop drawdowns in Iraq and Afghanistan and estimating $600 billion in lower interest payments on the national debt, the administration places its total deficit reduction over 10 years nearly $4.4 trillion.
Associated Press writers David Espo, Andrew Taylor, Ben Feller, and Ken Thomas contributed to this report.