Sun, Dec 02, 2012 - Page 7 News List

Obama warns of potential ‘Scrooge Christmas’ in US

AFP, HATFIELD, Pennsylvania

US President Barack Obama walks around the Rodon Group, a toy manufacturer in Hatfield, Pennsylvania, on Friday.

Photo: Reuters

US President Barack Obama warned on Friday that Republicans would give Americans a lump of coal for Christmas if they kill his plan to raise US$1.6 trillion from higher taxes on the wealthy.

However, the most powerful Republican in Washington, House of Representatives Speaker John Boehner, warned that talks on averting a year-end tax and spending crunch, which could tip the economy back into recession, were going nowhere.

Obama traveled to a toy factory in Pennsylvania to press his case for a plan to stop the US economy tipping off a “fiscal cliff” when automatic tax hikes and spending cuts come into force on Jan. 1.

Republicans have rejected Obama’s first offer to end the stalemate as “ridiculous” and negotiations between the two sides have hit a roadblock with just a month to go, punctuated by the holiday season, until the deadline.

“The sooner Congress gets this done, the sooner our economy will get a boost,” Obama said, pushing his plan to extend tax cuts for the middle class and to raise rates on families earning US$250,000 or more.

“If Congress does nothing, every family in America will see their income taxes automatically go up on January 1,” Obama said. “That’s sort of like the lump of coal you get for Christmas. That’s a Scrooge Christmas.”

Republicans have complained that Obama’s offer — presented to Boehner by US Treasury Secretary Timothy Geithner — was a rehash of his previous budget request.

“It was not a serious proposal. So right now we’re almost nowhere,” Boehner told reporters on Friday, complaining that Obama’s offer would not shave off sufficient government spending.

Republicans had said the Obama plan would only cut an extra US$400 billion in government spending, but an administration official who described the plan to reporters said the figure would be US$600 billion over 10 years.

The savings would be accrued by saving US$350 billion on the Medicare health program for the elderly and US$250 billion in savings on non-health mandatory programs, the official said.

Republicans say they are ready to raise more revenue from the wealthy, but want to do so by closing tax loopholes and limiting deductions.

The White House and the Republicans must reach an agreement by the end of the year that lowers the ballooning US deficit by US$1.2 trillion over 10 years, as mandated in a poison pill deal agreed last year.

If they do not, tax cuts in place since the presidency of George W. Bush will expire and US$500 billion in across-the-board spending cuts would kick in, possibly sending the economy into recession.

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