U.S. President Barack Obama Friday called on
leaders in the Senate to hammer out a last-minute deal to avert the
fiscal cliff of harsh austerity measures due to hit the US economy in
just days.
Obama said he was "modestly optimistic" that a deal could be
reached by Tuesday to spare the US and global economies the shock of
the so-called fiscal cliff, and charged Senate Majority Leader Harry
Reid, a Democrat, and his Republican counterpart Mitch McConnell with
coming together to craft a plan.
The men said they would try to have a recommendation within 48
hours, by Sunday, one day ahead of the deadline.
If the leaders cannot reach a compromise on their own, Obama
called for an "up-or-down vote" on his proposal that would allow
taxes to rise only on Americans earning more than 250,000 dollars a
year, extend unemployment benefits and halt some of the most drastic
spending cuts.
"We're now at the last minute. The American people are not going
to have any patience for a politically self-inflicted wound to our
economy," Obama said.
Obama met earlier Friday with congressional leaders from both
parties at the White House for more than an hour, described as
"constructive" by the senators and president.
If Democrats and Republicans cannot come to an agreement to
replace the looming austerity and tax measures with a more measured
approach, taxes would increase on most Americans and severe
government spending cuts would take effect at the new year in what
economists have said would be a major blow to the US economy.
Obama and Speaker of the House John Boehner have been in talks for
weeks to hammer out a deal. The discussions came to an impasse over
taxes, with Obama seeking an increased levy on the wealthiest
Americans and Boehner refusing to raise taxes on those earning less
than 1 million dollars per year - a proposal he could not even find
support for among his fellow Republicans. If they fail to act, tax
rates would rise on most Americans.
It is now up to the Senate leaders to forge a compromise.
"We have an obligation to do the best we can, and I've made it
very clear to the White House we're going to do the best we can,"
Reid said, describing the next 24 hours as crucial.
"Whatever we come up with is going to be imperfect," Reid said in
the Senate after the White House meeting.
Reid had predicted Thursday no deal would be reached, saying "it
looks like" the US would head off the fiscal cliff next week.
The fiscal cliff refers to the expiration of all tax cuts
implemented under former president George W Bush coupled with
across-the-board spending cuts. Approved in August 2011 during a
bitter partisan standoff on raising the debt ceiling, it was designed
to force both sides to reach agreement on deficit reduction measures.
If this deal were to take effect on Tuesday, government economists
say the economy would suffer a 600-billion-dollar blow in 2013 and be
pushed back into recession.
The gridlock has already begun to weigh on the US economy, with
monthly consumer confidence figures plunging in December at the
height of the holiday shopping season as negotiations stalled. Stock
markets have also fallen on the uncertainty, with the Dow Jones
Industrial Average and the Standard & Poor's 500 Index both off more
than 1 per cent Friday.
