Obama to appeal to Americans on fiscal crisis

WASHINGTON (AP) — President Barack Obama is taking his case to the American people as he pressures Republicans to allow tax increases on the wealthy while extending tax cuts for families earning $250,000 or less in order to avoid the looming austerity crisis known as the fiscal cliff.

The White House said Tuesday that the president wants to build support for his approach to avoid the across-the-board tax increases and steep spending cuts in defense and domestic programs that will take effect Jan. 1 if Obama and a divided Congress can't reach a deal to avoid it.

The "fiscal cliff" was the result of last summer's budget and debt deal between Obama and congressional Republicans. They were intended to drive the supercommittee — evenly divided between Democrats and Republicans — to strike a compromise. But the panel deadlocked and the warring combatants have spent more time since then blaming each other for the looming cuts than seeking ways to avoid them.

Experts warn the "fiscal cliff" could send the U.S. into another recession, and both Obama and Congress agree that it could harm the country's economic recovery, but an agreement still appears far from assured.

A newfound willingness from Republicans to consider tax increases comes with a significant caveat: larger cuts than Democrats seem willing to consider to key government health programs. The disconnect on benefit programs, coupled with an impasse between Republicans and the White House over raising tax rates on upper-bracket earners, paints a bleak picture as the clock ticks toward the fiscal debacle.

Obama met with small business owners at the White House on Tuesday. Participants described the hour-long meeting as a listening session for Obama, with the business owners urging him to reach an agreement.

"They had one message for the president, which is they need certainty. Please get this deal done as soon as possible. They very much want consumers out there knowing that they're going to have money in their pockets to spend," said Small Business Administration head Karen Mills.

Obama planned to meet Wednesday with more than a dozen leaders from large corporations, including Lloyd Blankfein of Goldman Sachs, Marissa Mayer of Yahoo!, Brian Roberts of Comcast and Arne Sorenson of Marriott.

Obama hits the road on Friday, visiting a Pennsylvania toy factory and broadcasting his case to extend current tax rates for all but those families making more than $250,000 a year.

Obama's approach this week was quickly criticized by Senate Republican leader Mitch McConnell, who said that "rather than sitting down with lawmakers of both parties and working out an agreement, he's back out on the campaign trail, presumably with the same old talking points we're all familiar with."

House of Representatives Speaker John Boehner, a Republican, has pushed for raising additional revenue through reducing tax loopholes instead of raising tax rates on wealthy Americans. He and other Republicans argue that the higher rates would also hurt some small businesses and hinder economic growth.

The White House has countered that the president will not sign legislation that extends current tax rates for the top 2 percent of income earners, or those households with incomes over $250,000.

White House officials have expressed a willingness to discuss changes to the programs that provide health insurance to the poor and elderly, but they oppose addressing Social Security, the government pension program, as part of the fiscal discussions.

Boehner and Republican leaders planned to meet Wednesday with members of a bipartisan coalition of former members of Congress and business leaders that has advocated cuts in spending in major health care programs as well as changes in the tax code to raise more money but also to lower rates.

Some business leaders have created a group called The Campaign to Fix the Debt, which has promoted a long-term plan to fix the massive federal debt and deficits.

Room for negotiation remains. Several key Republican lawmakers who signed a no-tax-increase pledge in the past, circulated by lobbyist Grover Norquist with the conservative Americans for Tax Reform, now say they will not be bound by it.

At the White House, spokesman Jay Carney said Monday that the shift away from Norquist signaled an opportunity for Republicans to work with President Obama.

"They represent what we hope is a difference in tone and approach to these problems and a recognition that a balanced approach to deficit reduction is the right approach," Carney said.

Heading into the 2012 elections, 279 lawmakers had signed Norquist's' pledge, according to Americans for Tax Reform.

Raising taxes, whether by closing loopholes or raising tax rates, is seldom a vote-winning strategy in the U.S. President George H.W. Bush broke his campaign promise to not raise taxes and ended up losing re-election in 1992.

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Associated Press writers Ken Thomas and Philip Elliott contributed to this report.

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