The Straits Times
www.straitstimes.com
Published on Dec 05, 2012
 

Obama to Republicans : Raise taxes on rich or no deal

 
 

WASHINGTON (AFP) - President Barack Obama warned Republicans on Tuesday there would be no deal on averting a potentially disastrous fiscal crisis without them caving in to his demand to raise tax rates on the rich.

But in an interview with Bloomberg TV, Mr Obama offered a hint of wiggle room, declining to state that the top income tax rate must go up and permanently remain at the 39.6 per cent level seen under the Clinton administration.

"We have the potential of getting a deal done," Mr Obama said, adding that Republican proposals to close loopholes and cap deductions would not produce sufficient revenue to make a serious cut in the deficit.

"We're going to have to see the rates on the top two percent go up and we're not going to be able to get a deal without it," Mr Obama said. If Mr Obama and Republicans cannot get a deal, George W. Bush-era tax cuts on all Americans will expire on Jan 1, at the same time as huge automatic spending cuts come into force, likely throwing the economy into recession.