U.S. President Barack Obama and four congressional leaders started negotiations Friday to try to resolve crucial government financial issues before the end of the year.
The lawmakers described the White House talks as constructive. One of Mr. Obama's political adversaries, John Boehner, the Republican leader in the House of Representatives, said he believes a compromise can be reached to cut spending while at the same time increasing government revenue.
“I believe that we can do this, and avert the 'fiscal cliff' that's right in front of us today.”
As the talks started, Mr. Obama said he and the lawmakers would have to make “tough compromises.” The so-called “fiscal cliff” refers to $600 billion in mandated spending cuts and tax increases that will take effect on January 1 unless an agreement is reached. Should there be a financial impasse between the two sides as the new year begins, key defense and domestic programs would be seriously affected by the spending reductions, and all American workers would face a sharp rise in taxes deducted from their wages.
“Our challenge is to make sure that we are able to cooperate together, work together, find some common ground, make some tough compromises, build some consensus to do the people's business. And what the folks are looking for – and I think all of us agree on this – is action. They want to see that we are focused on them, not focused on our politics here in Washington.”
Both Mr. Obama, the Democratic incumbent re-elected last week, and his Republican opponents in Congress agreed last year to set the end-of-2012 deadline to resolve the contentious tax and spending issues. Neither the White House nor Congress wants the spending curbs or higher taxes to take effect, but periodic attempts to reach a compromise have failed.
U.S. economists say that allowing the spending cuts and higher tax rates to take effect could send the fragile American economy back into a recession and boost the country's jobless rate from 7.9 percent to above 9 percent. U.S. stock markets have retreated in recent days over fears that the dispute will not be resolved.
One focal point of the extended debate over U.S. financial policies is whether the wealthiest Americans should pay higher taxes. Mr. Obama has vowed to end the current tax break for households making more than $250,000 a year, but Republicans have been adamant in opposition.
Mr. Obama is calling for $1.6 trillion in additional government revenue over the next decade. Republican leaders say some revenue can be raised through an improving economy and ending some current tax deductions, rather than raising tax rates.
In addition to Boehner, Senate Democratic leader Harry Reid and the top Senate Republican, Mitch McConnell, joined the president at the White House meeting, as did the House Democratic leader, Nancy Pelosi.
Earlier in the week, Mr. Obama met with American labor leaders and chief executives of major U.S. corporations about their priorities in resolving the policy stalemate. The president sought their support for what he has called a “balanced” mix of increased revenue for the government and spending cuts. His financial package is aimed at eventually reducing the country's accumulated $16 trillion in debt over the next decade.