Fiscal cliff talks sour, Obama threatens veto
Progress in talks in avoid a fiscal crisis appeared to stall on Wednesday as President Barack Obama accused Republicans of digging in their heels due to a personal grudge against him, while a Republican leader called the president "irrational."
Obama and House of Representatives Speaker John Boehner, the top Republican in Congress, have been negotiating a deal to avert harsh tax hikes and spending cuts scheduled for January that could trigger a recession, and Obama said he was puzzled over what was holding up the talks.
"It is very hard for them to say yes to me," the president told a news conference. "At some point, you know, they've got to take me out of it."
The rise in tensions threatens to unravel significant progress made over the last week in the so-called fiscal cliff talks, which aim to slow the growth of the country's US$16 trillion (NZ$19t) debt.
Obama and Boehner have each offered substantial concessions that have made a deal look within reach. Obama has agreed to cuts in benefits for seniors, while Boehner has conceded to Obama's demand that taxes rise for the richest Americans.
However, the climate of goodwill has soured since Republicans announced plans on Tuesday to put an alternative tax plan to a vote in the House this week that would largely disregard the progress made so far in negotiations.
Obama threatened to veto the Republican plan if Congress approved it.
Boehner's office slammed Obama for opposing their plan, which includes a Republican concession that would raise taxes on households making more than US$1 million a year.
"The White House's opposition to a backup plan ... is growing more bizarre and irrational by the day," Boehner said through his spokesman, Brendan Buck.
Boehner later told reporters he had enough votes in the House to pass the legislation, known as "Plan B," and urged Obama to "get serious" about a balanced deficit reduction plan.
US stocks extended losses on Wednesday after Boehner's comments.
Voting on the plan would provide political cover for Republican lawmakers who could afterward tell constituents that at least they voted for it and, in doing so, did their best to try to block Obama's agenda.
It would also be a litmus test for Boehner's concession to raise taxes, which is opposed by party orthodoxy. In a sign conservatives are coming around to Boehner's position, anti-tax activist Grover Norquist gave his blessing to the Republican leader's bill.
Obama and Boehner appear to have bridged their biggest ideological difference but remain hung up on the mix of tax hikes and spending cuts that would close the budget gap.
"What separates us is probably a few hundred billion dollars," Obama said.
The White House wants taxes to rise on incomes above US$400,000 a year, also a concession from Obama's opening proposal for a US$250,000 income threshold.
If a deal is not reached soon, some US$600 billion in tax hikes and spending cuts are set to begin next month. The measures could throw the economy back into recession.
Senior administration officials described negotiations as at a standstill and Obama warned he would ask everyone involved in the talks, "what it is that's holding it up?"
Still, the top Republican in the Senate said resolution could come by the end of the week.
"There's still enough time for us to finish all of our work before this weekend, if we're all willing to stay late and work hard," said Senate Republican leader Mitch McConnell.
Any deal by Obama and the Republican leadership would need the support of their parties' rank and file.