Obama: Middle-class tax hike would be a 'lump of coal'

JIM KUHNHENN, Associated Press

HATFIELD, Pa. (AP) — President Barack Obama argued Friday that allowing taxes to rise for the middle class would amount to a "lump of coal" for Christmas," while Republican House Speaker John Boehner declared that negotiations to surmount a looming fiscal cliff are going "almost nowhere."

Obama took his case to an audience in a Philadelphia suburb, saying that this move would present a "Scrooge Christmas" for millions of wage-earners. Speaking at a toy factory, the president said Republicans should extend existing Bush-era tax rates for households earning $250,000 or less, while allowing increases to kick in for the wealthy.

On Capitol Hill, Boehner argued that Obama's latest offer -- to raise revenue by $1.6 trillion over the next decade -- would be a "crippling blow" to an economy that is still struggling to find its footing. The Ohio Republican told reporters he would continue working with Obama to avoid hundreds of billions in tax increases and spending cuts that will take effect beginning in January if Washington doesn't act to stop it, but gave a gloomy assessment of the talks so far.

"There's a stalemate. Let's not kid ourselves," Boehner said. "Right now, we're almost nowhere."

Obama's speech came a day after his administration proposed $1.6 trillion in new taxes over 10 years, new spending for the unemployed and struggling homeowners and savings of about $400 billion in entitlement programs like Medicare. The proposal amounts to requests that were already d in Obama's Fiscal 2013 budget plan. Republicans rejected the offer as unreasonable.

Obama said he believed both parties "can and will work together" to reach an agreement to get its long-term deficit under control "in a way that's balanced and is fair."

"In Washington, nothing's easy so there is going to be some prolonged negotiations and all of us are going to have to get out of our comfort zones to make that happen," he said. "I'm willing to do that. I' hopeful that enough members of Congress in both parties are willing to do that as well."

White House officials hoped Friday's trip would build momentum for the president's case, even as Republicans describe the outing as an irritant and an obstacle to fruitful talks. The road trip was part of a dual White House strategy of having the president's team meet with members of Congress while Obama travels the country to pressure Congress to act.

Republicans have said they are open to new tax revenue but not higher rates.

Obama spoke at the Rodon Group manufacturing facility, showcasing the company as an example of a business that depends on middle-class consumers during the holiday season. The company manufactures parts for K'NEX Brands, a construction toy company whose products include Tinkertoy, K'NEX Building Sets and Angry Birds Building Sets.

The president joked that he's keeping his own "naughty and nice list" for members of Congress -- and only some would get a K'NEX set for Christmas.

Administration officials said the offer, presented to Hill Republicans by Treasury Secretary Tim Geithner, constituted much of what Obama has previously suggested in budget proposals.

One new feature in the Geithner plan is a call for increasing the nation's debt limit without the need for congressional approval. Under last year's debt ceiling deal, Obama simply had to notify Congress that he was raising the debt ceiling, a move that could be blocked only if both houses of Congress approved resolutions of disapproval that Obama could veto. The administration wants a permanent extension of the debt ceiling with a similar legislative arrangement and with no offsetting spending cuts, as demanded by Republicans.

"Unfortunately, many Democrats continue to rule out sensible spending cuts that must be part of any significant agreement that will reduce our deficit," Boehner said after meeting with Geithner Thursday.

White House spokesman Josh Earnest said Friday that the proposal for $1.6 trillion in tax revenue was presented in context of a "balanced approach" to deficit reduction throughout the campaign.

"This is the way that we can ask the wealthiest Americans to pay a little bit more to deal with our deficit challenges," Earnest said aboard Air Force One as Obama flew to Pennsylvania.

"This was what the president has campaigned on for a long time and that was what president pushed for in context of the discussions with House Republicans," Earnest said.

Earnest said the proposal laid out by Geithner should not come as a surprise to anyone. Referring to comments by House Republican staffers who expressed surprise at Geithner's proposal, Earnest said, "This morning I was surprised they were surprised."

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Associated Press writers David Espo, Andrew Taylor and Ken Thomas contributed to this report.

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