Obama and Republicans agree to negotiate on taxes

WASHINGTON Tue Nov 30, 2010 5:47pm EST

President Obama speaks to the press in the Eisenhower Executive Office Building near the White House, November 30, 2010. REUTERS/Jason Reed

President Obama speaks to the press in the Eisenhower Executive Office Building near the White House, November 30, 2010.

Credit: Reuters/Jason Reed

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WASHINGTON (Reuters) - President Barack Obama said on Tuesday he still disagreed with Republicans on whether to extend Bush-era tax cuts for the wealthiest Americans, but the two sides agreed to negotiate a deal in the coming days.

Obama said he appointed Treasury Secretary Tim Geithner and budget director Jack Lew to work with congressional Republicans and Democrats to come up with a compromise to prevent broad tax increases from occurring next year.

"We should work to make sure that taxes will not go up by thousands of dollars on hard-working middle-class Americans come January 1, which would be disastrous for those families but also could be crippling for the economy," Obama told reporters after a meeting with congressional leaders at the White House.

"There was broad agreement that we need to work to get that resolved before the end of the year."

If no agreement is reached, all tax-paying Americans could see higher bills next year, giving Republicans a chance to score politically by making tax cuts their priority when taking control of the House of Representatives in January.

Finding common ground before that time will be tricky.

Obama said he and many Democrats continued to believe that it would be "unwise and unfair" to spend $700 billion to extend tax cuts for the wealthiest Americans while also trying to bring down the U.S. deficit.

Republican leaders, emboldened by gains in the November 2 elections, argued that it would be better for the economy if tax cuts for all Americans were extended.

"Republicans made the point that stopping all the looming tax hikes and cutting spending would, in fact, create jobs and get the economy moving again," said Representative John Boehner, who will become Speaker of the House next year.

"We're looking forward to the conversation with the White House over extending all of the current rates, and I remain optimistic," he said.

BREAKING A LOGJAM

Obama met with Boehner and Mitch McConnell, the Republican leader in the Senate, as well as Democrats Nancy Pelosi, the current House speaker, and Harry Reid, the Senate majority leader.

The meeting at the White House lasted roughly two hours. Obama said he hoped the meeting would lead to a better relationship with congressional leaders, and White House spokesman Robert Gibbs said the president expressed regret for not having reached out more to Republicans in the past.

Republicans won a majority in the House in the November 2 elections, but the Democrats retained control of the Senate.

Obama said congressional leaders agreed to appoint members to help in the negotiation process with results expected in "the next couple of days," and Gibbs said those discussions could begin later on Tuesday.

"We agreed that there must be some sensible common ground, so I appointed my Treasury secretary, Tim Geithner, and my budget director, Jack Lew, to work with representatives of both parties to break through this logjam," Obama said.

The president may have to agree to extend cuts for Americans of all income levels for one to three years -- an onerous option to many Democrats, but one that may be the most likely outcome if the two sides agree on anything at all.

"There is some thought that the last thing that Nancy Pelosi wants to do on her way out of the Speaker's office is to have Congress approve an extension for tax cuts for the wealthy," said Brian Gardner, an analyst for investors at Keefe, Bruyette and Woods.

"She could muck things up a little bit."

New York Democratic Senator Charles Schumer has floated a possible compromise to keep the tax cuts for those making less than $1 million a year.

Reid has made clear he would like to hold a Senate vote on extending the rates only for those up to the $250,000 level to underscore the Democratic position, although such a vote is sure to fail.

Nobel laureate Peter Diamond, a nominee to the Federal Reserve Board of Governors, told Reuters Insider television that extending the tax cuts should be limited to those below the highest income bracket and should be temporary.

(Additional reporting by Kim Dixon, Thomas Ferraro, Caren Bohan, Alister Bull, Patricia Zengerle, Matt Spetalnick; Editing by David Storey and Paul Simao)

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Comments (70)
fromthecenter wrote:
I still don’t understand the logic of still leaving the tax cuts for the top 2 percent of the wealthiest people in the country when they decry the deficit and want to make cuts in places that the people can ill-afford the cuts. The argument that it will cost jobs is just plain non-sense. Does anybody really believe that if the wealthy have to pay in a little more they wont be able to buy that house in the hamptons or take their month long european vacation?

Nov 30, 2010 1:29am EST  --  Report as abuse
repar wrote:
Republicans are crazy if they think that the rich are going to get any more tax breaks. The rich in this country got rich off the sweat of labor. They didn’t make their money by themselves. It is time for the rich to earn their keep and pay their way to live in America. It is also time to start raising taxes on the richest of the rich. We have digressed too far from fairness in the taxing system–blame Ronald Reagan and his Republicans!

A country that is split between haves and have-nots is a country ripe for a revolution. There are always more have-nots than haves and it is time that the have-nots said “enough.”

Republicans, at least the Republicans of today, are no longer recognizable as a party of fiscal responsibility and moral restraint. They have become a party of fear and hate mongerers. They have also become anti-American. They cannot see that the policies that they espouse are not good for the moral and social fabric of our society. If they really wanted what was best for the country, they would work with President Obama. They don’t want to work with Obama because they fear that if they do and he winds up looking good then he’s a shoo-in for 2012 and Republicans can kiss the White House good-bye. But that is what maturity means–foregoing your own pleasures and wants for the greater good. The Republicans of today are immature and just want, want, want for themselves. They don’t want to do what’s best for the country. To do so would probably see them out of power for a generation…

Nov 30, 2010 1:57am EST  --  Report as abuse
warptek wrote:
Maybe not but they might rethink their business strategy and not expand or grow their business like perhaps they would have with the tax cuts in place. This almost always means HIRING new people, or not. You have to remember something, the wealthy also spend their money like everyone else and believe it or not, plan their budget accordingly. Afterall, how does one keep their wealth? Surely not by spending like drunken sailors. The point is even they have to face the economic uncertainties of the day. What we really cannot afford is a completely out of control government spending money with almost no regard to the diminishing tax revenues from 10% unemployment. THAT is the reason why Democrats look to expire the Bush tax cuts, so they can refund their irresponsible and out of touch agenda.

Nov 30, 2010 2:27am EST  --  Report as abuse
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