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No fiscal cliff deal without higher rates - Obama

Tuesday, December 04, 2012

President Barack Obama says there will be no deal to avert the "fiscal cliff" unless it includes raising tax rates on the wealthiest Americans.

Mr. Obama says he knows he won't get everything he wants in negotiations with congressional Republicans, and he signaled flexibility on where the rates eventually wind up.

The president's plan raises rates on the top 2 percent of income earners to 39.6 percent, which is where they were under former President Bill Clinton. White House officials have indicated they would be open to a lower rate if the same amount of revenue can be achieved through closing tax loopholes and other measures.

The Republican proposal, a 10-year $2.2 trillion blueprint, calls for raising the eligibility age for Medicare and lowering cost-of-living increases for Social Security benefits. The plan proposes to raise $800 billion in higher tax revenue, but would maintain tax cuts from George W. Bush's presidency that are set to expire at the end of this year.

"To protect the middle class while reducing the deficit, simple math dictates that tax rates must rise on the top 2 percent of taxpayers next year," Senate Majority Leader Harry Reid, D-Nev., said in a statement. "The sooner Republicans grasp that reality, the sooner we can avoid the fiscal cliff."

The White House complained the latest offer was still short on details about what loopholes would be closed or deductions eliminated. Boehner called the GOP proposal a "credible plan" and said he hopes the administration will "respond in a timely and responsible way."

It has been nearly a week since Mr. Obama and Boehner talked directly about the looming cliff, though their staffs have been in contact. Boehner attended a congressional holiday party at the White House Monday night, but avoided the photo line where members get their picture taken with the president and have a few minutes to talk.

The president met with a bipartisan group of governors, who sought assurances that any cuts in spending as part of an agreement on the fiscal cliff wouldn't shift the burden onto states. The governors said they wanted flexibility from the federal government on certain mandated programs like Medicaid to allow them to do more with less.

"We asked for flexibility on how the federal money is passed down to the states and the cuts that are passed down, that we could have some flexibility to do what's in the best interest of our states," said Oklahoma Gov. Mary Fallin, a Republican.

If a deal is not reached by the end of the year, across-the-board spending cuts and tax increases will go into effect.

The Associated Press contributed to this report.

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president barack obama, economy, budget, republican party, national news
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