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Obama addresses looming fiscal cliff | Obama addresses looming fiscal cliff |
(35 minutes later) | |
Newly re-elected President Barack Obama has said the wealthy must pay more taxes under any political deal to avert a looming budget crisis. | Newly re-elected President Barack Obama has said the wealthy must pay more taxes under any political deal to avert a looming budget crisis. |
He said Congress must act against the so-called fiscal cliff, a package of tax rises and spending cuts due early next year. | He said Congress must act against the so-called fiscal cliff, a package of tax rises and spending cuts due early next year. |
Mr Obama said he was inviting party leaders to the White House next week to discuss the issue. | Mr Obama said he was inviting party leaders to the White House next week to discuss the issue. |
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 affluent to pay more, but such a plan is anathema to Republicans. | Mr Obama has repeatedly called for the affluent to pay more, but such a plan is anathema to Republicans. |
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. | 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 timebomb | Ticking timebomb |
In the East Room of the White House on Friday, Mr Obama said: "If we're serious about reducing the deficit, we have to combine spending cuts with revenue. And that means asking the wealthiest Americans to pay a little more in taxes." | |
The president added he was "open to compromise" and new ideas, adding: "I'm committed to solving our fiscal challenges, but I refuse to accept any approach that isn't balanced." | |
Tax rises were a "central question" during the election campaign, Mr Obama said, and "the majority of Americans agree with my approach". | |
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 this week. | Investor concerns over the issue have been partly blamed for two straight days of losses on financial markets this week. |
Earlier on Friday, John Boehner, leader of the Republican-controlled House of Representatives, held a news conference. | Earlier on Friday, John Boehner, leader of the Republican-controlled House of Representatives, held a news conference. |
He suggested "special-interest loopholes in the tax code, both corporate and personal" could be eliminated. | He suggested "special-interest loopholes in the tax code, both corporate and personal" could be eliminated. |
Mr Boehner, who has struck a conciliatory tone to the president since his re-election, also restated his support for "entitlement reform as well as tax reform with lower rates". | Mr Boehner, who has struck a conciliatory tone to the president since his re-election, also restated his support for "entitlement reform as well as tax reform with lower rates". |
"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. | "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. |
Mr Boehner also cited a 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. | Mr Boehner also cited a 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. | 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." | 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-up | Obama cabinet shake-up |
But an 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. | But an 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. |
"[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. | "[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. |
Mr Obama's position has been that taxes should rise on earnings above $250,000. | Mr Obama's position has been that taxes should rise on earnings above $250,000. |
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 carrying out a post-mortem on their presidential election campaign. | Meanwhile, Republicans are carrying out a post-mortem on their presidential election campaign. |
Former Secretary of State Condoleezza Rice told CBS News on Friday the party's loss "really necessitates" new thinking. | Former Secretary of State Condoleezza Rice told CBS News on Friday the party's loss "really necessitates" new thinking. |
They had sent "mixed messages" on immigration and women's issues, she added. | They had sent "mixed messages" on immigration and women's issues, she added. |
While Mr Obama carried the popular vote by only a narrow margin, "clearly we are losing important segments" of the electorate, she said. | While Mr Obama carried the popular vote by only a narrow margin, "clearly we are losing important segments" of the electorate, she said. |