Developing

Obama Insists On Higher Taxes To Ease Deficit

In his first public comments since a victory speech after his Tuesday re-election, President Barack Obama aimed to set the tone for upcoming talks with congressional Republicans on avoiding the so-called "fiscal cliff".

Congress must come to an agreement on debt-reduction by the end of the year to prevent automatic tax increases and \$1.2trn (£754mn) in spending cuts - termed the "fiscal cliff" - that economists warn could plunge the US into a recession.

Mr Obama did not offer a specific plan on Friday for how to tackle the country's economic problems, but he made clear that raising taxes on the wealthiest Americans back to Clinton-era levels must be part of any outcome.

"If we’re serious about reducing the deficit, we have to combine spending cuts with revenue. And that means asking the wealthiest Americans to pay a little more in taxes," the president said.

He said he refused to accept any approach that was not balanced with tax increases on wealthy Americans.

The president also invited Congressional leaders of both parties to come to the White House next week for talks on how to avoid the fiscal cliff.

Mr Obama warned that inaction would automatically raise taxes on every American including "the 98% of Americans who make less than \$250,000 a year".

The president said his win in Tuesday's election was evidence that a majority of Americans agree with his approach.

Mr Obama's remarks came just hours after Speaker of the House John Boehner held a news conference underscoring his continued opposition to raising taxes on the country's highest earners.

"Everyone wants to get more Americans back to work again. Raising tax rates will slow down our ability to create the jobs that everyone says they want," Mr Boehner said.

He did advocate simplifying and "cleaning up the tax code" by eliminating some loopholes and wasteful tax breaks in order to foster economic growth.

Mr Boehner also made it clear that be believes the president should take the lead.

A new Congressional Budget Office report released on Thursday forecast the economy falling into recession if there is a protracted impasse in Washington and the government falls off the fiscal cliff for the entire year.

Other analysts say the cliff is more like a slope, where no dire consequences would be felt immediately - giving lawmakers time to negotiate.

Though most political analysts call a long deadlock unlikely, such a scenario could push the jobless rate to 9.1% by next fall. The unemployment rate is now at 7.9%.