Mon, Dec 24, 2012 - Page 7 News List

Obama takes brief holiday after ‘fiscal cliff’ deal fails

SHORT RESPITE:Before the US president left for Hawaii, he asked the US Congress to devise a plan to avoid the ‘cliff’ as compromises on either side failed to win a majority

Reuters, KAILUA, Hawaii

Taking what promised to be a very brief Christmas break from the ongoing struggle to avoid the “fiscal cliff” of tax hikes and spending cuts, US President Barack Obama relaxed with his family on Saturday at a beach retreat in Hawaii.

The US Congress is set to return to Washington on Thursday and Obama has pledged to work with lawmakers to strike a deal to avoid the economic shock from tax and spending measures set to take effect on Jan. 1 if a deal cannot be reached, which many economists say could push the US economy back into recession.

The US president is expected to indulge in some of his favorite pastimes on the island where he was born and raised: golf, an expedition for the local treat “shave ice,” and an evening out with family and friends. He hit the links at the nearby US Marine Corps base under sunny skies on Saturday afternoon.

Obama’s idyll was not expected to last more than four days and he will likely retrace the more than 7,725km trip from the Aloha State to Washington after Christmas in a bid to cut a deal with Republicans, who failed on Thursday last week to agree on competing tax and spending bills of their own.

Before leaving Washington on Friday evening, Obama urged Congress to come up with a stopgap measure to spare the US economy the jolt of about US$536 billion in tax increases and about US$110 billion in spending cuts divided equally between the US military and most other federal departments.

Obama has scaled back his ambitions for a sweeping budget bargain with Republicans. Instead, he is calling for a limited measure sufficient to prevent the government from careening off the fiscal cliff by extending tax cuts for most taxpayers and forestalling a painful set of agency budget cuts.

In a White House appearance on Friday, Obama also called on Congress to extend jobless benefits for the long-term unemployed that would otherwise be cut off for 2 million people at the end of the year.

Obama’s announcement was a recognition that chances for a larger agreement before year’s end have probably collapsed. It also suggested that any chance for a smaller deal may rest in the Senate, particularly after the collapse of a plan by House of Representatives Speaker John Boehner to permit tax rates to rise on incomes above US$1 million.

“In the next few days, I’ve asked leaders of Congress to work toward a package that prevents a tax hike on middle-class Americans, protects unemployment insurance for 2 million Americans, and lays the groundwork for further work on both growth and deficit reduction,” Obama said. “That’s an achievable goal. That can get done in 10 days.”

Maybe, maybe not. The latest plan faces uncertainty at best in the sharply divided Senate.

Boehner, giving the Republican weekly radio address, said: “Of course, hope springs eternal and I know we have it in us to come together and do the right thing.”

Earlier, Boehner said Obama needs to give more ground to reach an agreement and that both he and Obama had indicated by telephone on Monday last week that their latest offers were their bottom lines.

“How we get there, God only knows,” he added.

Obama said that he had offered to meet Republicans halfway when it came to taxes and “more than halfway” toward their target for spending cuts.

However, it is clear that there is great resistance in Republican ranks to forging a bargain with Obama along the lines of a possible agreement that almost seemed at hand just a few days ago: tax hikes at or just above US$1 trillion over 10 years, matched by comparable cuts to federal health care programs, Social Security benefits and across federal agency operating budgets.

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