* Poll says Americans favor mix of tax hikes, spending cuts
* Obama spoke with Boehner, Reid on weekend
* Cantor: "We were not re-elected to raise taxes"
By Richard Cowan
WASHINGTON, Nov 26 Republicans in the U.S.
Congress on Monday called on President Barack Obama to detail
long-term spending cuts to help solve the country's fiscal
crisis, while holding firm against the income tax rate increases
for the wealthy that Democrats seek.
In a further sign of tense relations between negotiators who
are trying to avert a year-end "fiscal cliff" of steep tax
increases and spending cuts, the White House expressed doubts
that "balanced" deficit reductions can be achieved merely by
limiting tax breaks and cutting spending, as Republicans
The White House is already on record threatening to veto any
bill that does not include income tax rate increases on the
wealthy that are opposed by Republicans.
While Congress returned from its Thanksgiving holiday break
amid increasing talk about long-term tax reform plans and a need
to compromise, the two parties showed no signs yet of having
found a way around the short-term tax obstacle necessary to head
off the fiscal cliff on Dec. 31.
"We remain at an impasse," Senate Republican Leader Mitch
McConnell of Kentucky said during a floor speech.
The lack of progress helped push financial markets down
slightly, as fiscal cliff worries made investors less willing to
"My fear is that the can gets kicked down the road for at
least a six-month period" to search for a long-term fiscal deal,
said Bonnie Baha of DoubleLine Capital, an asset management
firm. "The market is going to hate it, especially the stock
Obama spoke with House Speaker John Boehner, a Republican
from Ohio, about the budget negotiations during the weekend, as
well as with Senate Majority Leader Harry Reid, a Nevada
Democrat, a White House official said.
Obama spokesman Jay Carney said the president would speak
with them again "at the appropriate time."
"People in both parties agree we need a 'balanced approach'
to deal with our deficit and debt and help our economy create
jobs," Boehner said through a spokesman. But the two parties
were clearly at odds over what constitutes a balanced approach.
The fiscal cliff's approximately $600 billion in tax hikes
and spending cuts that would begin in 2013 would push the U.S.
economy back into recession, according to the non-partisan
Congressional Budget Office.
A new CNN poll found that the public is now closely watching
the debate unfolding in Washington over how to tame budget
deficits that have exceeded $1 trillion for four consecutive
The poll found that two-thirds of those surveyed fear the
country would face major problems without a remedy to the fiscal
cliff and 77 percent believed their own financial situation
would suffer. Republicans would get more of the blame than
Obama, according to the survey.
The remedy preferred by two-thirds in the poll was a mix of
spending cuts and tax increases to get the country's finances in
Seconding that Monday was Warren Buffett, the legendary
investor who changed the debate about U.S. tax reform in 2011
with a call for the rich to pay more.
In a New York Times op-ed column printed on Monday, Buffett
suggested Congress move immediately to implement minimum taxes
of 30 percent on incomes of $1 million to $10 million and 35
percent above that.
Others offered up different approaches to raising revenues.
Republican Senator Bob Corker of Tennessee, for example, said he
has talked to congressional leaders about capping tax deductions
at $50,000 instead of raising income tax rates. Similar ideas
were earlier floated by failed Republican presidential candidate
The business community, concerned about a potential deadlock
in Congress, is continuing its lobbying campaign for a quick
On Wednesday, Aetna health insurer head Mark Bertolini is
planning, along with other CEOs, to visit Washington to persuade
lawmakers to take action to avert the fiscal cliff.
Marion Blakey, head of the Aerospace Industries Association,
said Congress should find added revenues and savings to major
government programs. His group has repeatedly warned that the
$109 billion in automatic spending cuts set to start in January
- half falling on defense - would severely impact his industry.
Meanwhile, U.S. Chamber of Commerce head Thomas Donohue and
other business leaders huddled with top White House officials on
Monday. Details were not available.
SHADES OF 2011
With Republicans demanding more spending cuts and Democrats
insisting on some income tax increases, fiscal cliff talks are
about where they were in mid-2011, when Obama and Boehner failed
to reach a comprehensive deal on deficit reduction.
House Majority Leader Eric Cantor of Virginia, the No. 2
Republican in that chamber, said in an interview aired on MSNBC
on Monday, "We were not re-elected to raise taxes or increase
Instead, Cantor said Obama should outline how he would save
money on expensive federal entitlement programs that include the
Social Security retirement plan and Medicare healthcare for the
elderly. The White House said Social Security should not be part
of deficit-reduction negotiations.
Unlike a handful of Republican members, Cantor, who
represents the Richmond, Virginia area, did not disassociate
himself from an anti-tax increase pledge sponsored by Grover
Norquist and his powerful lobby, Americans for Tax Reform.
As for Buffett, Cantor said his concern was not for
billionaires but for "a small-business man or woman in
Midlothian, Virginia" who might not invest money and hire people
as a result of tax increases.
While Democrats also have talked about a willingness to find
savings in the growing costs of entitlement programs, they first
want to lock in income tax increases on top earners - families
with net incomes above $250,000 a year.
The spending cuts that Republicans are demanding would
likely be negotiated next year, not during the few remaining
weeks Congress has this year, because of the complexity of
revamping the huge entitlement programs.
On Dec. 31, across-the-board tax cuts enacted in 2001 and
2003 under then-President George W. Bush expire. Republicans
want all of them to be extended for a year while Congress weighs
comprehensive tax reform along with long-term spending cuts.
But Democrats have countered that all of the deficit
reductions undertaken in 2011 focused on cutting domestic
programs and now it is time for a more balanced approach that
would require the rich to contribute to fiscal reforms.