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Obama and Republicans on warpath

WASHINGTON, Nov 9: US President Barack Obama on Friday offered to work with his rival Republicans to prevent a fiscal crisis that can paralyse his administration and increase taxes on middle class Americans, instead of the rich he intends to tax.

In his first White House appearance since re-election, Mr Obama invited congressional leaders to his office next week for talks on averting the crisis resulting from a set of measures scheduled to occur in January.

Known as fiscal cliff, the measures are the result of recent laws, passed by a Republican-dominated Congress.

The laws call for automatic tax increases and spending cuts aimed at reducing budget deficit in 2013. The measures, part of the Budget Control Act of 2011, include a 19.63 per cent increase in taxes and 0.25 pc reduction in spending.

The expected tax increase will mostly affect the middle classes who played a major role in securing a second term for Mr Obama on Tuesday.

The Republicans, who received majority of their votes from rural America and are supported by the wealthy, seem determined to go ahead with the measures.

Although Mr Obama won both popular and electoral votes, the Republicans managed to retain their majority in the House of Representatives, which gives them the clout they need to derail Mr Obama’s intended reforms.

President Obama said the fiscal cliff measures would be bad for the economy and urged lawmakers to pass legislation right away to stop automatic year-end tax hikes.

White House officials, briefing reporters before Mr Obama’s speech, said the measures would affect families earning less than $250,000 per year.

Those tax hikes would deprive the average middle class family of about $2,000 in take-home pay next year, they added.

“It would be bad for the economy, and would hit families that are already struggling to make ends meet,” Mr Obama said. “We shouldn’t need long negotiations and drama to solve that part of the problem.”

But John Boehner, the Republican Speaker of the House of Representatives, made it clear that he would not help Mr Obama unless he changed his plan to increase taxes on wealthy Americans.

Mr Boehner, who acknowledged having a ‘cordial’ conversation with the president after his re-election on Tuesday, said: “The problem with raising tax rates on the wealthiest Americans is that more than half of them are small-business owners” and taxing them “will slow down our ability to create the jobs that everyone says they want.”

It may be difficult for President Obama to change his plan as raising taxes on wealthy Americans was one of the main planks of his re-election campaign.

And that’s why he made it obvious in his speech at the White House that any compromise with the Republicans must include tax increases on the wealthiest Americans.“This was a central question during the election,” Mr Obama said in his first post-election comments on the economy. “The majority of Americans agree with my approach.”

“I am not going to ask students and seniors and middle-class families to pay down the entire deficit while people like me, making over $250,000, aren’t asked to pay a dime more in taxes. I’m not going to do that,” said Mr Obama.