(Bloomberg) President Barack Obama again warned lawmakers that the U.S. economy will suffer unless there’s an agreement on a way to prevent more than $600 billion in automatic spending cuts and tax increases from taking effect.
Like what you see? Click here to sign up for Accounting Today's daily newsletter to get the latest news and behind the scenes commentary you won't find anywhere else.
If businesses “don’t have confidence that we’re going to get this done, then they’re going to start pulling back” on expansion and hiring, Obama said Thursday during a visit to a family in a northern Virginia suburb of Washington.
The president was at the home of Tiffany Santana, a high school English teacher, and Richard Santana, who works at a local auto dealership, to illustrate the hardships for families if Congress doesn’t act to stop Bush-era tax cuts for middle- income workers from expiring at the end of the year.
He reiterated his stance that the rate for top earners should be allowed to rise as one element of a deficit-reduction plan.
“This is a solvable problem,” Obama said. It’s “the right thing to do for our economy.”
The Congressional Budget Office has forecast the U.S. would tip into recession if the slashed spending and higher taxes for all earners goes into effect.
The deadline for action comes amid signs the economy is rebounding. Claims for unemployment declined 25,000 to 370,000 in the week ended Dec. 1, the Labor Department said today, the third consecutive drop. Household wealth in the U.S. climbed in the third quarter, the Federal Reserve reported.
The President and Republicans in Congress are locked in a dispute over taxes and spending. Obama has offered $4.4 trillion in deficit reduction over a decade and has vowed he won’t sign any bill that doesn’t raise taxes on top earners.
Republicans, led by House Speaker John Boehner, have countered with a $2.2 trillion package of spending reductions and revenue increases by limiting deductions and closing loopholes. Republicans generally want tax cuts extended.
Boehner and Obama spoke Wednesday, aides to both said without describing their talks. The House is on recess until Dec. 11.
Obama has urged Americans to use the social network Twitter to stress the need to preserve in tax cuts for the middle class, a benefit of about $2,200 a year. More than 260,000 people have spoken, using the hashtag #My2K, according to the White House.