Faced with a political impasse and with just 10 days left until the end of the year, President Barack Obama urged Congress on Friday to pass a smaller measure to avert the so-called fiscal cliff.
The Huff Post reports, that speaking to the press before departing for Christmas vacation, the president laid out three things he wanted in a scaled-down package: the extension of Bush-era tax rates for incomes below $250,000, the extension of unemployment insurance benefits and the framework for larger deficit reduction.
“We’ve only got 10 days to do it. So I hope that every member of Congress is thinking about that. Nobody can get 100 percent of what they want,” said Obama.
Obama called on lawmakers to use the holiday break to cool off frayed nerves, “drink some eggnog, have some Christmas cookies, sing some Christmas carols,” and come back next week ready to make a deal.
Still, the president expressed confidence that an agreement could be reached, and called on Congress to put aside the political theater that had derailed talks over the last week.
His new plan is the latest hit to the prospects of a larger grand bargain, but that might be music to the ears of some Democrats and Republicans alike.
The president had modified his own offer from seeking $1.6 trillion in taxes and about $400 billion in spending cuts to $1.2 trillion in taxes and some $900 billion in cuts. His proposal also included chained CPI, a Social Security benefit cut that is unpopular among many Democrats.
Obama acknowledged what had become obvious: the broader deficit reduction deal he seeks will likely come in stages, rather than in the so-called grand bargain he and Boehner have been negotiating, says the CNN.
President Barack Obama spoke separately Friday with Speaker John Boehner and the top Senate Democrat to try to salvage a fiscal cliff deal by the end of year, after Republican disarray in the U.S. House put the negotiations in limbo.
John Boehner signalled on Friday he was not planning to quit as Speaker but he has been left wounded.
Before his defeat in Congress, Boehner had extracted a compromise from Obama to raise taxes on Americans making more than $400,000 a year, instead of the president’s preference of those with income of $250,000 a year.
The debacle brought closer the prospect of the country falling over the “fiscal cliff” on 1 January, with all taxpayers facing a rise and automatic cuts in federal spending, from defence to welfare, kicking in.
According to the Reuters, republican Representative Tim Huelskamp criticized Boehner’s handling of the negotiations, saying the speaker had “caved” to Obama opening the door to tax hikes. Huelskamp, a dissident first-term congressman from Kansas, said he was not willing to compromise on taxes even if they are coupled with cuts to government spending sought by conservatives.
Fears that the negotiations would fail sent stock markets reeling and oil prices dropping on Friday as investors feared the political deadlock in Washington would drag down global growth.
The stall in any deal led to a sell-off on US stock markets, with the Dow industrial average falling more than 120 points, reports the Guardian.
Richard Griffiths, associate director of Berkeley Futures, said: “The market just stopped in its tracks after that unexpected announcement. But it’s showing resilience. It’s not down by that much and people think it’s just a delay before they reach a deal in maybe three weeks’ time.”