J. Scott Applewhite, Associated Press
WASHINGTON — With tough decisions looming to avoid the so-called fiscal cliff, House Speaker John Boehner made it clear Friday that he's leaving it to President Barack Obama to make the first move.
Obama has been adamant that taxes have to be raised on wealthy Americans — a sticking point with Republicans who say it would hurt job creation.
Boehner declined to provide specific proposals to avert the set of tax increases and automatic spending cuts due to hit in January that economists warn could cripple the economy. The Ohio Republican said he's unwilling to raise tax rates on upper-income earners and any deal should revise the tax code to lower rates and eliminate some tax breaks.
"I'm proposing that we avert the fiscal cliff together in a manner that ensures that 2013 is finally the year that our government comes to grips with the major problems that are facing us," Boehner said in a news conference Friday at the Capitol. He said cuts to Medicare, Medicaid and food stamps, known as entitlement programs in Washington-speak, have to be part of the equation.
Boehner also indicated that raising the debt limit, which the government will reach sometime in the spring, should be part of any negotiations. But pressed for more details beyond that framework, he said he didn't want to limit ideas to address the problem. He punted to Obama.
"This is an opportunity for the president to lead," Boehner said as he opened his appearance. He repeated a version of that phrase four times during the 11 minutes he spoke. "This is his moment to engage the Congress and work toward a solution that can pass both chambers."
Boehner said he and Obama had a brief and cordial conversation earlier this week on the need to avert the fiscal cliff. The president planned to address the matter Friday afternoon in a statement from the White House.
Obama faces a tough, core decision: Does he pick a fight and risk a prolonged impasse with Republicans or does he rush to compromise and risk alienating Democrats still celebrating his victory?
Many of his Democratic allies hope Obama will take a hard line. Republicans warn that a fight could poison efforts for a rapprochement in a bitterly divided Capitol and threaten his second-term agenda.
Obama has been silent since his victory speech early Wednesday morning, but Capitol Hill Republicans have filled the vacuum with vows to stand resolutely against any effort by the president to fulfill a campaign promise to raise rates on family income over $250,000 to Clinton-era levels.
"The problem with raising tax rates on the wealthiest Americans is that more than half of them are small business owners," Boehner said. "We know from Ernst & Young, 700,000 jobs would be destroyed. We also know that it would slow down our economy."
A lot is at stake. A new Congressional Budget Office report on Thursday predicted that the economy would fall into recession if there is a protracted impasse in Washington and the government falls off the fiscal cliff for the entire year. Though most Capitol-watchers think that a long deadlock is unlikely, the analysts say such a scenario would cause a spike in the jobless rate to 9.1 percent by next fall.
Some analysts believe that the fiscal cliff is more like a fiscal slope and that the economy could weather a short-term expiration of the Bush-era tax cuts and that the government could manage a wave of automatic spending cuts for a few weeks. But at a minimum, going over the fiscal cliff would mean delays in filing taxes and obtaining refunds and would rattle financial markets as the economy struggles to recover.
The CBO analysis says that the cliff — a combination of automatic tax increases and spending cuts — would cut the deficit by $503 billion through next September, but that the fiscal austerity would cause the economy to shrink by 0.5 percent next year and cost millions of jobs.
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