The White House on Friday tried to rescue
stalled talks on a fiscal crisis after a
Republican plan imploded in Congress,
but there was little headway as
lawmakers and President Barack Obama
abandoned Washington for Christmas.
In remarks before flying to Hawaii for a
break, President Obama suggested
reaching a short-term deal on taxes and
extending unemployment insurance to
avoid the worst effects of the "fiscal cliff"
on ordinary Americans at the start of the
New Year.
"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," he said.
President Obama said he wanted to sign
legislation extending Bush-era tax cuts for
98 per cent of Americans in the coming
days.
The Democrat appeared to be offering
bickering lawmakers a way to fix the most
pressing challenge - tax cuts that expire
soon - while leaving thorny topics such as
automatic spending cuts or extending the
debt ceiling for later.
President 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.
Negotiations were thrown into disarray on
Thursday when House of Representatives
Speaker John Boehner failed to convince
his fellow Republicans to accept tax cuts
for even the wealthiest of Americans as
part of a possible agreement with Obama.
"How we get there, God only knows," Mr
Boehner told reporters on Friday, when
asked about a possible comprehensive
fiscal cliff solution.
If there is no agreement, taxes would go
up on all Americans and hundreds of
billions of dollars in automatic
government spending cuts would kick in
next month - actions that could plunge
the U.S. economy back into recession.
President Obama spoke to Mr Boehner on
Friday and held a face-to-face White
House meeting with the top Democrat in
Congress, Senate Majority Leader Harry
Reid.
Before his defeat in Congress, Mr
Boehner had extracted a compromise
from the President 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.
But with talks stalled on the level of
spending cuts to which President Obama
would agree, Mr Boehner attempted a
backup plan to raise taxes only on those
making more than $1 million a year -
amounting to just 0.18 percent of
Americans.
BAD DEFEAT FOR BOEHNER
Mr Boehner's reverse in the House was
worse than first thought. A key Republican
lawmaker said Mr Boehner scrapped the
vote when he realized that between 40
and 50 of the 241 Republicans in the
House would not back him.
The President and his fellow Democrats in
Congress are insisting that the wealthiest
Americans pay more in taxes in order to
help reduce federal budget deficits and
avoid deep spending cuts. Republicans
control the House and Democrats control
the Senate.
Stocks dropped sharply early Friday on
fears that the United States could go fall
back into recession if politicians do not
prevent it.
But major indexes lost less than 1
percent, suggesting investors still held
out hope that an agreement will be
brokered in Washington.
"I think if you get into mid-January and
(the talks) keep going like this, you get
worried, but I don't think we're going to
get there," said Mark Lehmann, president
of JMP Securities, in San Francisco.
Mr Boehner, joined by his No. 2, Eric
Cantor, at a Capitol Hill news conference,
said the ultimate fault rests with Obama
for refusing to agree to more spending
reductions that would bring down
America's $1 trillion annual deficit and
rising $16 trillion debt.
"What the President has proposed so far
simply won't do anything to solve our
spending problem. He wants more
spending and more tax hikes that will
hurt our economy," Mr Boehner said.
Democrats responded with incredulity.
House members, heading to their home
states for the holidays, were instructed to
be available on 48 hours' notice if
necessary.
"They went from 'Plan B' to 'plan see-
you-later,'" the President's adviser David
Axelrod said on MSNBC on Friday
morning.
The crumbling of Mr Boehner's plan
highlights his struggle to lead some House
Republicans, who flatly reject any deal
that would increase taxes on anyone.
Republican Representative Tim
Huelskamp criticized Mr Boehner's
handling of the negotiations, saying the
speaker had "caved" to Obama opening
the door to tax hikes. Mr 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.
Fiscal conservatives "are so frustrated
that the leader in the House right now,
the speaker, has been talking about tax
increases. That's all he's been talking
about," Mr Huelskamp said on MSNBC on
Friday morning.
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