US President Barack Obama Targets Tax Breaks

At a White House news conference US President Barack Obama says that the government should reach consensus on the debt limit it and defaults for the first time. Otherwise it will have significant and damaging consequences.

President Obama, speaking at a news conference on Wednesday, insisted that raising more revenue must be part of any deficit-reduction deal and criticized Republicans for protecting tax breaks for "millionaires and billionaires." Photo: Pete Souza/The White House

Barack Obama made the case Wednesday for ending certain tax breaks for “millionaires and billionaires” in a deal to keep the U.S. government from defaulting on its debt. Obama sharped his tone with just weeks left for Democrats and Republicans to reach an agreement.

He called for new job-creation measures that are likely to further complicate talks with Republicans to bring the country’s spiralling debt under control. Obama suggested that some initiatives designed to stimulate the economy in the short term should be included in a final deal, singling out a yearlong extension of the payroll tax break for employees, which expires in January.

President fixed the 2 August deadline to raise the country’s legal borrowing limit. He repeated that he was not employing “scare tactics” and the deal needed to “done now.”

He also affirmed: “If the United States government, for the first time, cannot pay its bills, if it defaults, then the consequences for the US economy will be significant and unpredictable. All the headwinds that we’re already experiencing in terms of the recovery will get worse.”

Republicans responded by opposition to any tax increases, grounding they would hurt the fragile economy. Senate Democratic leaders met with Obama Thursday for a briefing on the budget talks. Obama told them he had made a general proposal to Republicans and hoped to get a response by the end of the week.

Senate Majority Whip Dick Durbin (D., Ill.), who was in the meeting said: “There are negotiations involving the president and the leaders. He said he wants some time.”

Democrats and Republicans have agreed on $1 trillion in spending cuts over 10 years. The only unsolved problem is whether to include some tax changes, as Democrats insist, or none, as Republicans insist. Obama criticized Republicans for resisting Democratic calls for ending tax breaks for corporate-jet owners, hedge-fund managers and oil companies.

During a Wednesday news conference Obama said: “You can’t reduce the deficit to the levels that it needs to be reduced without having some revenues in the mix.” Obama hopes Republicans will agree on raising taxes: “The Republican leadership in Congress will, hopefully sooner rather than later, come to the conclusion that they need to make the right decisions for the country, that everybody else has been willing to move off their maximalist position and they need to do the same.”

Mr. Obama did not go far enough for some liberals, who said after the news conference that they had wanted him to make an absolute statement on the need for tax increases in any debt deal. But the populist message from Mr. Obama during the news conference suggests that the president is preparing for battle over that issue.

With his comments, Mr. Obama sought to make it politically uncomfortable for members of Congress to leave Washington on one of their frequent summertime breaks while the debt discussions remain unresolved. He even made a vague threat that “we are going to start having to cancel things” unless a deal is reached.

“They’re in one week, they’re out one week,” Mr. Obama said, his voice rising a bit. “And then they’re saying, ‘Obama has got to step in.’ You need to be here. I’ve been here. I’ve been doing Afghanistan and Bin Laden and the Greek crisis. You stay here. Let’s get it done.” He paused before adding: “All right. I think you know my feelings about that.”

But perhaps the most interesting moment — and, potentially, the one that could be taken personally by his adversaries — was when Mr. Obama compared Republican lawmakers to his 10- and 12-year-old daughters, and not favorably. He said that his girls manage to do their homework a day ahead of time. “It is impressive,” he said. “They don’t wait until the night before. They’re not pulling all-nighters.”

Asked what the president was trying to say by telling the story of his two daughters, David Axelrod, one of the president’s top political advisers, surmised that perhaps Mr. Obama was just expressing pride in his own parenting skills. Or, he added, maybe “the point he was making is that this is not something that should be left to the last minute.”

Republicans dismissed Mr. Obama’s comments as just another Democratic call for economically damaging tax increases. Senate Minority Leader Mitch McConnell (R., Ky.) said in a speech Wednesday:”There’s an important principle at stake in this debate.”

“It’s not about the rich versus the poor. It’s about whether Washington will ever be held accountable for its mistakes. That’s why Republicans refuse to let the taxpayers take the hit when it comes to reducing the debt,” he added. [via New York Times, Politifact and The Wall Street Journal]

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