Obama pushes Republicans on taxes on wealthy
President Barack Obama insisted on eliminating tax breaks for oil companies and the superrich as part of any plan to tackle the nation's deficit, casting himself as a voice of reason.
Unfazed, Republican lawmakers stuck to their vow to block new taxes.
Speaking at his first news conference in three months, Obama said on Wednesday that Congress must make significant progress by week's end in what have been desultory and lengthy negotiations on a debt-cutting plan that the Republicans are demanding in return for raising the U.S. debt limit. He castigated legislators for planning summer recesses while the American economy faced such serious threats.
The Treasury Department says it must be able to borrow more money by Aug. 2 or the United States faces an unprecedented default on its mounting $14.3 trillion debt, predicted to grow by $1.4 trillion by the end of this fiscal year, which ends Sept. 30.
Obama, facing a re-election bid in November 2012, has watched his poll numbers languish below 50 percent approval, primarily because of the sluggish economic recovery after the Great Recession.
With the coming election fight clearly in mind, he openly attacked Republicans for holding to what he called an "unsustainable" position. Regardless, the opposition party says it will not vote to raise the debt limit unless Democrats agree - without any taxes increases - to $2 trillion in cuts to government spending over 10 years.
Obama's aggressive response came with the country souring on the recovery, the Republican presidential contenders taking aim at his economic record and opposition leaders in Congress challenging him to show more leadership in the debt stalks. His re-election hinges on the economy, and Obama is trying to restore a sense of public confidence.
Obama has faced such countdowns before. He and Congress avoided a government shutdown earlier this year at the last possible moment. And they cut a deal on taxes in December, days before a tax increase would have automatically kicked in.
The president called on lawmakers to work through their July Fourth Independence Day recess. By late Wednesday, the Senate appeared ready to comply.
As Obama spoke, the International Monetary Fund warned that inaction on raising the debt limit could produce a spike in interest rates and "severe shock to the economy and world financial markets."
In April, key credit agency Standard & Poor's lowered its long-term outlook for the federal government's fiscal health from "stable" to "negative," and warned of serious consequences if lawmakers fail to reach a deal to bring the deficit under control. A loss of the country's sterling triple-A rating would ripple through the American economy, making loans more expensive and credit more difficult to obtain.
Facing what most economists predict would be a catastrophic outcome if the U.S. cannot pay its bills, Obama took his message to the American people. Polls show a majority of voters broadly support higher taxes for wealthy Americans and Big Oil.
"The tax cuts I'm proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies and hedge fund managers and corporate jet owners," Obama said.
The president said Democrats had already shown they were ready to "take on their sacred cows" by agreeing to big cuts in programs important to the party and its supporters. Republicans must be too, he said.
Obama drew a swift rebuttal from Republican House of Representatives Speaker John Boehner.
"The president is sorely mistaken if he believes a bill to raise the debt ceiling and raise taxes would pass the House," he said in a statement. "The votes simply aren't there - and they aren't going to be there, because the American people know tax hikes destroy jobs."
Mainstream Republicans, like Boehner, are caught in a political vise. They face a potential uprising among the increasingly strong small-government, low-tax Tea Party wing of the party if they concede to any additional revenue for the government.
As the Republicans move toward the 2012 election they insist that debt reduction be limited to spending cuts, including slashing big benefit programs such as Medicare and Medicaid, the U.S. government health care programs for the poor and elderly.
Senate Republican leader Mitch McConnell, a major voice in the party in opposition to higher taxes, said Obama has said as recently as six months ago that keeping taxes where they are enables businesses to hire more workers.
"So he can call for tax hikes," McConnell said. "But he can't call for tax hikes and job creation. It's one or the other."