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Obama to address looming fiscal cliff Obama to address looming fiscal cliff
(about 1 hour later)
Re-elected President Barack Obama will make a statement on the economy later, setting the stage for a political showdown over a looming budget crisis. Re-elected President Barack Obama is due to make a statement on the economy, setting the stage for a political showdown over a looming budget crisis.
He is expected to discuss the so-called fiscal cliff, a package of tax rises and spending cuts due early next year unless Congress acts.He is expected to discuss the so-called fiscal cliff, a package of tax rises and spending cuts due early next year unless Congress acts.
Budget analysts warn the US will tip into recession unless a deal is struck.Budget analysts warn the US will tip into recession unless a deal is struck.
Mr Obama has repeatedly called for the wealthy to pay more taxes, but such a plan is anathema to Republicans.Mr Obama has repeatedly called for the wealthy to pay more taxes, but such a plan is anathema to Republicans.
The fiscal cliff would see Bush-era tax cuts expire at the end of 2012, combined with automatic, across-the-board reductions to military and domestic spending. The fiscal cliff would see the expiry of George W Bush-era tax cuts at the end of 2012, combined with automatic, across-the-board reductions to military and domestic spending.
Ticking timebombTicking timebomb
The International Monetary Fund has repeatedly warned that failure by US lawmakers to reach a deal would deepen uncertainty over the global economy.The International Monetary Fund has repeatedly warned that failure by US lawmakers to reach a deal would deepen uncertainty over the global economy.
Investor concerns over the issue have been partly blamed for two straight days of losses on financial markets. Investor concerns over the issue have been partly blamed for two straight days of losses on financial markets this week.
John Boehner, leader of the Republican-controlled House of Representatives, told ABC News on Thursday: "Raising tax rates is unacceptable. Mr Obama is due to deliver his statement from the East Room of the White House at 13:05 (18:05 GMT).
"Frankly, it couldn't even pass the House. I'm not sure it could pass the Senate." It could set the tone for his second-term working relationship with Republicans, whom he has battled repeatedly over the last four years.
Mr Boehner reiterated his opposiiton to tax rises in a news conference on Friday morning. Earlier on Friday, John Boehner, leader of the Republican-controlled House of Representatives, held a news conference.
He spoke shortly before Mr Obama was due to deliver his statement from the East Room of the White House at 13:05 (18:05 GMT). He suggested "special-interest loopholes in the tax code, both corporate and personal" could be eliminated.
The president's statement could set the tone for his second-term working relationship with Republicans, whom he has battled repeatedly over the last four years. Mr Boehner, who has offered to work with the president since his re-election, also restated his support for "entitlement reform as well as tax reform with lower rates".
One Obama official said the president's oft-stated call for tax rises on the wealthy has been vindicated by his resounding victory over Republican challenger Mitt Romney in Tuesday's election. "Entitlement reform" is Washington-speak for cuts to federal spending - cherished among Mr Obama's Democratic allies - on programmes such as healthcare for the poor and elderly and Social Security pensions.
"One of the messages that was sent by the American people throughout this campaign is ... [they] clearly chose the president's view of making sure that the wealthiest Americans are asked to do a little bit more in the context of reducing our deficit in a balanced way," senior White House adviser David Plouffe was quoted by Reuters news agency as saying. Mr Boehner also cited a href="http://www.cbo.gov/sites/default/files/cbofiles/attachments/11-08-12-FiscalTightening.pdf" >Congressional Budget Office (CBO) report on Thursday which warned the US economy would fall back into recession if no deal were struck on the fiscal cliff.
The analysis projected that the package of tax rises and spending cuts would cut the ballooning US deficit by $503bn (£315bn) through to next September, but also shrink the economy by 0.5% and cost millions of jobs.
In an interview with ABC News on Thursday, Mr Boehner said: "Raising tax rates is unacceptable. Frankly, it couldn't even pass the House. I'm not sure it could pass the Senate."
Obama cabinet shake-upObama cabinet shake-up
Mr Obama's position has been that taxes should rise on earnings above $250,000 (£157,000). One Obama official said the president's oft-stated call for tax rises on the wealthy has been vindicated by his resounding victory over Republican challenger Mitt Romney in Tuesday's election.
Mr Boehner says his party is willing to countenance cutting loopholes and special exemptions, but only in exchange for an overhaul of the tax code. "[Voters] clearly chose the president's view of making sure that the wealthiest Americans are asked to do a little bit more in the context of reducing our deficit in a balanced way," said senior White House adviser David Plouffe.
Republican lawmakers also want cuts to federal healthcare programmes such as Medicare, Medicaid and food-stamp assistance for the poor. Mr Obama's position has been that taxes should rise on earnings above $250,000.
A Congressional Budget Office (CBO) report published on Thursday warned that the US economy would fall back into recession if no deal were struck on the fiscal cliff.
The analysis projected that the package of tax rises and spending cuts would cut the ballooning US deficit by $503bn through to next September, but also shrink the economy by 0.5% and cost millions of jobs.
Meanwhile, as Mr Obama turns his attention to shaping a second term in office his administration is expected to undergo a shake-up in the coming weeks.Meanwhile, as Mr Obama turns his attention to shaping a second term in office his administration is expected to undergo a shake-up in the coming weeks.
Secretary of State Hillary Clinton, Defence Secretary Leon Panetta and Treasury Secretary Timothy Geithner are among those expected to leave their posts.Secretary of State Hillary Clinton, Defence Secretary Leon Panetta and Treasury Secretary Timothy Geithner are among those expected to leave their posts.
Speculation has been swirling in Washington over possible replacements, with Democratic Senator John Kerry among those tipped as a substitute for Mrs Clinton.Speculation has been swirling in Washington over possible replacements, with Democratic Senator John Kerry among those tipped as a substitute for Mrs Clinton.
Meanwhile, Republicans are trying to find out what went wrong their presidential election campaign. Meanwhile, Republicans are trying to find out what went wrong with their presidential election campaign.
The party's officials said they would poll voters extensively in battleground states, as well as holding focus groups and discussions with supporters.The party's officials said they would poll voters extensively in battleground states, as well as holding focus groups and discussions with supporters.
The review would not attempt to alter the party's ideological base, Republican National Committee spokesman Sean Spicer told the Washington Post.The review would not attempt to alter the party's ideological base, Republican National Committee spokesman Sean Spicer told the Washington Post.
"This is no different than a patient going to see a doctor," Mr Spicer said."This is no different than a patient going to see a doctor," Mr Spicer said.