Negotiations over 'fiscal cliff' begin: Obama tells Hill that people want action, cooperation (+video)
Carolyn Kaster, Associated Press
WASHINGTON — President Barack Obama urged the leaders of Washington's divided government on Friday to join him in "tough compromises" to keep the economy from plummeting and taxes from rising for millions of Americans in the new year.
"I think we're all aware that we have some urgent business to do," Obama said at the White House with the nation's top Republican, House Speaker John Boehner, at his side. Sitting to the president's other side was the Senate's leader, Democrat Harry Reid, as negotiations over the "fiscal cliff" began in earnest.
Without a deal between Obama and Congress, a series of tax increases and spending cuts will kick in on Jan.1, with potential to throw the nation into recession. All sides have a deep political stake in coming to terms, but Obama and Republicans in Congress are at a stalemate on raising taxes on incomes over $250,000.
On his turf, Obama made the only statement before reporters were asked to leave the Roosevelt Room.
Obama used the moment before the TV cameras to try to set a tone of compromise, right down to the body language. Obama ribbed Boehner about his birthday on Saturday, saying he would not embarrass the speaker with a cake because he was not sure how many candles would be needed.
"Yeah, right," a smiling Boehner said as the two literally poked some fun at each other and then shook hands.
Across the table sat the Senate's top Republican, Mitch McConnell, who has set a harsher tone toward Obama in the fallout of last week's election.
House Minority Leader Nancy Pelosi, Vice President Joe Biden, Treasury Secretary Timothy Geithner and a few top White House advisers also took part.
Obama said the goal was to prevent a tax hike for middle-class families, create jobs and keep the economy growing.
"That's an agenda that Democrats and Republicans and independents, people all across the country share," Obama said. "So our challenge is to make sure that we are able to cooperate together, work together, find some common ground, make some tough compromises, build some consensus to do the people's business."
He added: "My hope is that this is going to be the beginning of a fruitful process."
In news conferences and other public statements, Obama and the congressional leaders have been setting negotiating markers for a debt deal. The session at the White House was their first meeting together since the election, one in which Obama says the American people voted for his way to cut the debt.
Obama has insisted that any deal involve higher taxes on the top 2 percent of income earners. Republicans leaders are vowing to resist rate hikes as job-killers, though they've signaled they're open to added revenue through curbs on deductions and credits.
On Friday afternoon, Obama will continue his efforts to build a coalition of support for his position when he and Biden meet with leaders of civil rights and other organizations. Obama has already met with leaders of labor and liberal organizations as well as corporate CEOs who have backed his call for greater tax revenue.
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 self-imposed 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.
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 would come by banking already accomplished cuts and questionable savings from winding down military operations in Iraq and Afghanistan.
In 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 non-starter.
The bargaining landscape has shifted markedly in Obama's favor since his failed talks with Boehner, R-Ohio, 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 debt obligations. Now newly re-elected, Obama is putting Republicans on notice that he's willing to mount a national campaign blaming them for holding up renewed tax cuts for most with an ultimatum against renewing them for top income earners.
The 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 a compromise on taxes and spending 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 Reid, the Senate Democratic leader, insists that ideas like a lower inflation adjustment for Social Security are off the table now.
AP White House Correspondent Ben Feller and AP writer Jim Kuhnhenn contributed to this report.
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