Obama insistent on tax hikes for wealthy in ‘fiscal cliff’ deal

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WASHINGTON (AP) — The White House has laid out its vision for pulling back from the looming “fiscal cliff” and now demands that opposition Republicans get specific about their plan to prevent what many economists predict would mean a return to recession and spiking unemployment in a still-fragile U.S. economy.

The top Republican in Congress responded, however, by saying he was “flabbergasted” by the opening White House offer, declaring it was a “nonsense” approach to solving the nation’s budget crisis.

President Barack Obama and congressional Republicans have until Dec. 31 to reach agreement on how to increase government revenue and cut spending to avoid big automatic tax increases on all Americans and massive cuts in government programs ranging from education to the military.

Adding to the negative consequences of a negotiated outcome is the coincidence of the end to two other programs at the same time — a reduction in the payroll tax that Americans pay into the federal Social Security pension program and extended government benefits to the long-term unemployed.

Legislation has set the Dec. 31 deadline for the expiration of George W. Bush-era tax cuts and the implementation of steep across-the-board federal spending cuts amounting to hundreds of billions of dollars.

In interviews on five television political talk shows that aired Sunday, Treasury Secretary Tim Geithner said Republicans have to stop using “political math” and say how much they are willing to raise tax rates on the wealthiest 2 percent of Americans and then specify the spending cuts they want.

“The ball really is with them now,” Geithner, one of the White House’s chief negotiators with congressional Republicans, said.

With just four weeks remaining to reach a deal, however, House Speaker John Boehner countered that Republicans have a plan for providing as much as $800 billion in new government revenue over the next decade and would consider the elimination of tax deductions on high-income earners. But when pressed on “Fox News Sunday” for precise details, the Ohio Republican declined to be specific.

There are “a lot of options in terms of how to get there,” Boehner said.

On Thursday, Geithner presented congressional leaders with Obama’s postelection blueprint, but Boehner, leader of the Republican-controlled lower chamber of Congress, dismissed the plan as “not serious,” merely a Democratic wish list.

As outlined by administration officials, the plan calls for nearly $1.6 trillion in new tax revenue over the next decade, while making $600 billion in spending cuts, including $350 billion from the program that provides health care coverage to the elderly and other health programs. But it also contains $200 billion in new spending on jobless benefits, public works and aid for struggling homeowners — and would make it virtually impossible for Congress to block Obama’s ability to raise the debt ceiling.

“I was just flabbergasted,” Boehner said, describing his meeting with Geithner. “I looked at him and I said, ‘You can’t be serious?'” The speaker, noting the short time between the Nov. 6 election and the new year, said time has been lost so far “with this nonsense.”

Obama’s political team ramped up its efforts, blasting out an email Sunday night urging supporters to pressure Congress to extend tax cuts that would add up to about $2,000 for a middle-class family of four.

Stephanie Cutter, who was Obama’s deputy campaign manager, said in the email that the president was trying to get Congress to “do the right thing and act before the New Year, but he needs our help. We’ve got a good track record here: When we make our voices heard and urge Congress to take action — whether it’s about health care, student loans, Wall Street reform, or ‘Don’t Ask, Don’t Tell’ — they listen.”

Republican leaders have said they will accept higher tax revenue overall, but only through what they call tax reform — closing loopholes and limiting deductions — and only coupled with tough measures to curb the explosive growth government health insurance programs for the poor and federal pensions available to retirees.

But Geithner insisted that there’s “no path to an agreement (without) Republicans acknowledging that rates have to go up for the wealthiest Americans.” He also said the administration would only discuss changes to federal pensions “in a separate process,” not in talks on the fiscal cliff.

As for government outlays, Geithner said if Republicans don’t think Obama’s cutting enough spending, they should make a counter-proposal. “They might want to do some different things. But they have to tell us what those things are,” he said.

The Senate bill would extend many of the expiring tax cuts for middle-income families, while letting tax cuts expire for individuals who make more than $200,000 and married couples making more than $250,000.

Copyright 2012 The Associated Press.