In Michigan, Obama rallying support for tax hikes on richest Americans

U.S. President Barack Obama gestures as he speaks to workers about the economy during a visit to Daimler Detroit Diesel in Redford, Mich., Monday, Dec. 10, 2012. (AP / Paul Sancya)

WASHINGTON -- President Barack Obama is pressing for public support Monday to raise taxes on the wealthiest Americans, a day after he and House Speaker John Boehner met one-on-one for the first time to discuss ways to avert the "fiscal cliff."

Neither side provided details of the weekend meeting at the White House. But with just three weeks until a flurry of tax hikes and spending cuts start taking effect, the mere fact that the meeting happened was seen as progress.

Negotiations continue to center on whether to raise tax rates for the top 2 per cent of income earners. Obama, in a campaign-style speech to auto workers in Michigan on Monday, is expected to stress that he won't sign a deal that doesn't include higher tax rates for the wealthiest Americans.

While Republicans have long opposed that approach, some GOP lawmakers are suggesting the party relent on taxes in order to win concessions from the president on changes to benefit programs such as Medicare. Still, Boehner's office indicated Monday that the speaker wasn't ready to take that step.

"The Republican offer made last week remains the Republican offer," said Brendan Buck, a Boehner spokesman. He was referring to a GOP plan that offered $800 billion in new revenue over the next decade through reducing or eliminating unspecified tax breaks on upper-income earners, but not by raising tax rates.

The White House also showed no new signs of flexibility following Obama and Boehner's one-on-one meeting. Spokesman Jay Carney, speaking to reporters traveling with Obama to Michigan, reiterated that there could be no deal without tax rate increases on the wealthiest Americans. But he said the president remains optimistic that both sides can reach an agreement.

"He's eager to get a deal and he believes a deal is possible," Carney said.

Meanwhile business leaders, tired of Washington's partisan bickering creating uncertainty in the marketplace, are emphasizing the need to hammer out a deal before year's end.

"The millions of people that work for us, their lives are in flux. And this is incredibly critical we get this done now," said Jeffrey Immelt, GE's chief executive and head of the presidential advisory council on competitiveness.

Immelt, in remarks aired Monday on "CBS This Morning," added: "Everyone knows we need revenue," because spending cuts alone won't solve the problem.

GOP mavericks are putting increased pressure on their party's leaders to rethink how they approach negotiations with Obama in the wake of a bruising national election that left Democrats in charge of the White House and Senate.

"There is a growing group of folks looking at this and realizing that we don't have a lot of cards as it relates to the tax issue before year end," Sen. Bob Corker, R-Tenn., told "Fox News Sunday."

If Republicans agree to Obama's plan to increase rates on the top 2 per cent of Americans, Corker added, "the focus then shifts to entitlements, and maybe it puts us in a place where we actually can do something that really saves the nation."

Conservative stalwart Sen. Tom Coburn of Oklahoma had already floated a similar idea. Rep. Tom Cole, R-Okla., has said Obama and Boehner could at least agree not to raise tax rates on the majority of Americans and negotiate the rates of top earners later.

"It's not waving a white flag to recognize political reality," Cole said on CNN's "State of the Union."

But such ideas face an uphill battle. Many House Republicans say they wouldn't vote for tax rate hikes under any circumstances. And GOP leadership could lose leverage in the negotiations if it raises the rate on upper-income earners without getting anything substantial in return like entitlement reform.

Democratic leaders have suggested they are unwilling to tackle entitlement spending in the three weeks left before the fiscal cliff is triggered.

"I just don't think we can do it in a matter of days here before the end of the year," Senate Democratic Whip Dick Durbin, D-Ill., said of Medicare reform specifically, in an interview Sunday on NBC's "Meet the Press."

"We need to address that in a thoughtful way through the committee structure after the first of the year," Durbin added.

The "fiscal cliff" refers to rate increases that would affect every worker who pays federal taxes, as well as spending cuts that would begin to bite defense and domestic programs alike. Economists say the combination carries the risk of a new recession, at a time the economy is still struggling to recover fully from the worst slowdown in decades.

The president's message in Michigan will be that the economy is rebounding and Congress should not risk that progress to save tax cuts for the rich. The president will use the Daimler Detroit Diesel plant where he'll speak to illustrate his point, noting that the company plans to spend an additional $100 million to boost production in the U.S.

The president's re-election campaign also emailed supporters Monday, asking them to call their representatives and urge them to back Obama's fiscal cliff plan, even suggesting a script they could read. It's the latest example of the White House trying to put its massive voter database to use during the fiscal cliff negotiations in the same way it did during the presidential campaign.

Obama's plan would raise $1.6 trillion in revenue over 10 years, partly by letting decade-old tax cuts on the country's highest earners expire at the end of the year. He would continue those Bush-era tax cuts for everyone except individuals earning more than $200,000 and couples making more than $250,000. The highest rates on top-paid Americans would rise from 33 per cent and 35 percent to 36 per cent and 39.6 pe rcent, respectively.

Boehner's plan, in addition to calling for $800 billion in new revenues, also would cut spending by $1.4 trillion, including by trimming annual increases in Social Security payments and raising the eligibility age for Medicare from 65 to 67.