Obama stands firm on higher tax rates

President Barack Obama watches a worker during a visit Monday to the heavy-duty-engine line at the Daimler Detroit Diesel plant in Redford, Mich.
President Barack Obama watches a worker during a visit Monday to the heavy-duty-engine line at the Daimler Detroit Diesel plant in Redford, Mich.

— President Barack Obama warned Monday that he “won’t compromise” on his demands that the wealthiest Americans pay higher tax rates, digging in on the chief sticking point between the White House and Republicans as they seek a way to avert a fiscal crisis.

“Our economic success has never come from the top down,” Obama said to a few hundred cheering autoworkers at a German-owned truck factory in Redford. “It comes from the middle out; it comes from the bottom up.”

Obama said the country couldn’t afford a “manufactured” crisis, and pledged that he would fight to extend tax cuts for the middle class before they expire at year’s end.

Obama took his campaign style trip to Michigan a day after he and House Speaker John Boehner met privately at the White House. Neither side would characterize the meeting, saying it’s in the “best interests” of both sides not to negotiate in public as their parties seek a deal to avoid the “fiscal cliff,” $600 billion in automatic tax increases and spending cuts that are to go into effect in January and could push the fragile economy into a recession.

Republicans have long opposed Obama’s call for higher tax rates on the wealthy, but some GOP lawmakers are suggesting the party relent on taxes in order to win concessions from the president on changes to benefit programs such as Medicare. Still, Boehner’s office indicated Monday that the speaker wasn’t ready to take that step.

“We continue to wait for the president to identify the spending cuts he’s willing to make as part of the ‘balanced’ approach he promised the American people,” a written statement from the Ohio Republican’s office said.

“The Republican offer made last week remains the Republican offer,” said Brendan Buck, a Boehner spokesman. He was referring to a GOP plan that offered $800 billion in new revenue over the next decade through reducing or eliminating unspecified tax breaks on upper-income earners, but not by raising tax rates.

In Michigan, Obama was more restrained in his remarks, never directly criticizing Republicans and devoting much of his remarks to extolling Daimler Detroit Diesel as an example of how the country can rebound.

Daimler, which owns Detroit Diesel, will invest $120 million in new equipment to make truck engines, axles, and transmissions at the factory. That will improve the integration of its components, said Obama, who took a tour of the plant floor and watched a demonstration of pistons being inserted into an engine. It is also forecast to create 115 new jobs.

Detroit Diesel, a manufacturer of heavy-duty trucks, traces its roots to 1938. It was sold to Daimler in 2000 after Daimler had acquired Chrysler. Detroit Diesel remained part of Daimler after it sold off Chrysler, amid heavy losses, to a hedge fund in 2007. The car maker was rescued in a bailout by the Obama administration.

White House press secretary Jay Carney, speaking to reporters traveling with Obama, reiterated that there could be no deal on the fiscal cliff without tax rate increases on the wealthiest Americans. But he said the president remains optimistic that both sides can reach an agreement.

“He’s eager to get a deal and he believes a deal is possible,” Carney said.

Obama’s plan would raise $1.6 trillion in revenue over 10 years, partly by letting decade-old tax cuts on the country’s highest earners expire at the end of the year. The president wants tax rates to rise on incomes over $200,000 for individuals and $250,000 for couples. Individuals earning more than $200,000 and couples making more than $250,000 would see their top rates rise from 33 percent and 35 percent to 36 percent and 39.6 percent, respectively.

Boehner’s plan, in addition to calling for $800 billion in new revenue, also would cut spending by $1.4 trillion, including by trimming annual increases in Social Security payments and raising the eligibility age for Medicare from 65 to 67.

The White House is trying influence the process with the public’s help. The president’s re-election campaign e-mailed supporters Monday, asking them to call their representatives and urge them to back Obama’s fiscal cliff plan, even suggesting a script they could read.

It was the latest example of the White House trying to put its voter database to use in the same way it did during the presidential campaign.

Business leaders, meanwhile, emphasized the need to reach an agreement before year’s end.

“The millions of people that work for us, their lives are in flux. And this is incredibly critical we get this done now,” said Jeffrey Immelt, GE’s chief executive officer and head of the presidential advisory council on competitiveness, in remarks aired Monday on CBS This Morning.

Some Republicans are putting increased pressure on their party’s leaders to rethink how they approach negotiations with Obama. Sen. Bob Corker, R-Tenn., told Fox News Sunday that if Republicans agree to Obama’s plan to increase rates on the top 2 percent of Americans, “the focus then shifts to entitlements, and maybe it puts us in a place where we actually can do something that really saves the nation.”

But such ideas face an uphill battle. Many House Republicans say they wouldn’t vote for tax-rate increases under any circumstances. And GOP leadership could lose leverage in the negotiations if it raises the rate on upper-income earners without getting anything substantial in return like entitlement-program changes.

Democratic leaders have suggested they are unwilling to tackle entitlement spending in the three weeks left before the fiscal cliff is triggered.

Meanwhile, a bipartisan group of 22 lawmakers also said Monday that substantial reductions in military spending should be part of any budget deal.

“As we transition from wartime to peacetime, and as we confront our nation’s fiscal challenges, future defense budgets should reflect the conclusion of these wars and acknowledge that our modern military is able to approach conflicts utilizing fewer but more advanced resources,” the House Republicans and Democrats wrote in a letter to Obama and congressional leaders.

The lawmakers said “substantial defense savings” could be achieved without undermining national security, and they urged Obama, Boehner and other congressional leaders to include such savings in any agreement.

The group included Reps. Barney Frank, D-Mass., and Mick Mulvaney, R-S.C., who earlier this year led a coalition of liberal Democrats and conservative Republicans in persuading the House to cut$1.1 billion from a $608 billion defense bill.

The Pentagon already is facing a reduction of nearly $500 billion over a decade in projected spending, part of the budget deal that Obama and congressional Republicans agreed to in August 2011. If the two sides fail to reach an agreement to avoid the fiscal cliff, the military would face automatic, across-the-board cuts totaling $55 billion next year and close to $500 billion over 10 years.

The lawmakers wrote that they had serious concerns about those arbitrary cuts, but they support the general intent to improve the nation’s fiscal health.

“We know the United States can maintain the best fighting force in the world while also pursuing sensible defense savings,” they wrote. “How we spend our resources is just as important as how much we spend. The true foundation of our military power is not dollars or equipment, but the men and women of our armed forces, who have no equal.” Information for this article was contributed by David Espo, Ben Feller, Julie Pace, Donna Cassata and Ken Thomas of The Associated Press; by Mark Landler of The New York Times; and by Lisa Lerer of Bloomberg News.

Front Section, Pages 1 on 12/11/2012

Upcoming Events