Obama Says No Deal If Fiscal Plan Doesn’t Include Tax Rate Increase on the Rich

President Obama said there would be no budget deal unless Republicans agreed to tax increases for the wealthiest Americans. Meanwhile, Republicans say their plan would close tax loopholes without rate hikes. Kwame Holman reports on the impasse to avert an economic plunge triggering automatic spending cuts and tax increases.

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    Neither side showed signs of budging today as the nation edged closer toward a so-called fiscal cliff that could raise taxes by year's end.

    We begin with a report from NewsHour congressional correspondent Kwame Holman.


    We're going to have to see the rates on the top 2 percent go up. And we're not going to be able to get a deal without it.


    In his first interview since the election, President Obama rejected a proposal from House Speaker John Boehner. He spoke on Bloomberg Television.


    Unfortunately, the speaker's proposal right now is still out of balance. I'm happy to entertain other ideas that the Republicans may present.

    But we are not going to simply cut our way to prosperity or to cut our way out of this deficit problem that we have. We're going to need more revenues. And in order to do that, that starts with higher rates for the folks at the top.


    The president did say today he would consider lowering rates again for the top 2 percent next year as part of a broader tax overhaul.

    The House Republican plan envisions $2.2 trillion in deficit reduction over the next decade; $800 billion would come from new revenues, but with no hike in tax rates for top earners.

    Instead, the plan relies on $1.2 trillion in reduced spending, including $600 billion from changes in Medicare and Medicaid.

    At the White House today, the president met with a bipartisan group of governors, pressing his own plan for deficit reduction, that proposal, $1.6 trillion in revenue from tax increases on the wealthy and $600 billion in spending cuts mostly from reductions in Medicare.

    He also wants authority to raise the debt ceiling without congressional intervention. The governors emerged afterwards treading a line between the two sides.

    Delaware Gov. Jack Markell, a Democrat, is chairman of the National Governors Association.


    We came not to embrace one plan or the other. We came to make it very clear, A., why it's so important that something happen both on the economic and on the fiscal issue, and, B., to make sure that the president, the White House, the administration, and members of Congress realize that we are willing partners.


    Republican Scott Walker of Wisconsin and other leaders also urged the burden of Medicaid spending for the poor not be shifted to the states.


    We hope there's going to be something that happens here in this nation's capital. And, in the end, we hope it's something that is positive for our states, both for our finances, but also for our states' economies.


    According to the governors, the president reiterated his commitment to try to get an agreement with Republicans here at the Capitol.

    But in a statement, Speaker Boehner said the president's plan doesn't have the votes to pass the House. And Mr. Boehner said his plan represents a middle ground. And he's ready and eager to talk to the president about it.

    Congresswoman Cathy McMorris Rodgers of Washington state is the party's conference chair in the House.


    We're going to either succeed together or we're going to fail together. The president is calling for higher taxes, as well as more spending. He's calling for another stimulus at a time when we need tax reform.

    We need to be looking at — and the Republicans have put forward tax reform that includes closing the loopholes, eliminating some of those tax credits that will actually impact the wealthiest.


    Some Republicans said the Boehner plan goes too far in taxing the well-off. South Carolina Sen. Jim DeMint, a staunch fiscal conservative, blasted the plan on Twitter today.

    He said: "Speaker Boehner's offer of an $800 billion tax hike will destroy jobs and allow politicians in Washington to spend even more."

    But the Senate's Democratic majority leader, Harry Reid, warned Republicans against listening to such voices.

  • SEN. HARRY REID, D-Nev.:

    You can't let these negotiations be dictated by the Tea Party. Our guiding principle should be the views of the vast majority of the American people.

    The math is clear. The only way to accomplish these things is to allow the rates to go up on the top 2 percent of taxpayers. We're not going to twist ourselves into contortions to appease a vocal minority of the Tea Party.


    In turn, Senate Minority Leader Mitch McConnell said President Obama needs to ride herd on Democrats if there's any hope of agreement.


    Only one person in the country can deliver the members of his party to support a deal that he makes. And that's the president. There have been no deals of this magnitude made in modern times in Congress and forced on a reluctant president.

    So, I would hope the president would turn off the campaign. Congratulations. You had a great victory. And let's get serious about dealing with this deficit and debt here at the end of the year.



    The partisan back-and-forth was briefly on hold this evening for the lighting of the Capitol Christmas Tree, but there was little else in the day's developments to suggest happy holidays.