Market Overview

Barack Obama Rallies Support For His 'Fiscal Cliff' Plan

US President Barack Obama is launching a week of public outreach as he presses his case for tax rises on the wealthy to avert the so-called fiscal cliff.

Mr Obama meets business leaders at the White House on Tuesday and members of middle-class families on Wednesday.

He wants Republicans to accept tax increases on the wealthy, while extending tax cuts for families earning $250,000 (£155,000) or less.

The fiscal cliff, a package of spending cuts and tax rises, hits on 1 January.

The measure, which would suck about $600bn out of the economy, was intentionally engineered as part of a 2011 compromise between President Barack Obama and congressional Republicans.

Negotiators then hoped it would spur the two sides to reach a long-term solution to the US budget deficit.

A US failure to step back from the fiscal cliff could help plunge the world back into recession, the OECD, which represents the world's richest nations, warned on Tuesday..

As part of his outreach effort this week, Mr Obama is also scheduled to visit a local company in Pennsylvania on Friday.

With tax cuts passed under President George W Bush set to expire on 1 January, the White House says Mr Obama will not sign any deal which extends that measure for the wealthiest Americans.

John Boehner, the top Republican in Congress, has said he would consider increasing tax revenue by closing loopholes, though he remains opposed to raising taxes.

The House of Representatives Speaker has said such a strategy would hit small businesses and hold back economic growth.

Republicans instead want to see cuts to federal programmes that have strained the US budget, adding to the deficit because of the increasing number of participants and rising costs.

In recent days, however, several Republicans have shown willingness to countenance tax increases, including prominent Republican Senators Lindsey Graham, Bob Corker and Saxby Chambliss along with Congressman Peter King.

Grover Norquist, a powerful anti-tax lobbyist, acknowledged on Monday that those Republicans were having “impure thoughts”.

Republican Pennsylvania Senator Pat Toomey told CNN on Tuesday that Democrats should accept cuts to large government programmes such as Social Security and Medicare.

A senior Democratic Senator, Richard Durbin, is expected to broach that thorny topic in a speech later on Tuesday.

“Progressives should be willing to talk about ways to ensure the long-term viability of Medicare and Medicaid,” he was to tell the Center for American Progress, the Associated Press reported.

But the Illinois senator has said he does not believe the debate over Medicare and Medicaid should not be part of negotiations on averting the fiscal cliff.

BBC World News

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