Obama Directs Lawmakers to Work Out Stopgap Fiscal Deal

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Obama's appearance before reporters late Friday came amid sharply increased pessimism³ that a deal can be achieved, and after most members of Congress had left town for their Christmas break.

On Thursday, The Republican Speaker of the House of Representatives, John Boehner, decided⁴ to bring an alternative tax plan to a vote in the House.

But he failed to gain enough Republican support for his proposal to raise tax rates on annual incomes above $1 million and was forced to withdraw the bill, a humiliating defeat.

The president said he had just spoken with Boehner by telephone, and also met with Senate Democratic Majority Leader Harry⁵ Reid. The president urged them to come up with an interim⁶ solution before the year ends.

"In the next few days, I have asked leaders of Congress to work toward a package that prevents a tax hike on middle class Americans, protects unemployment insurance for two million Americans, and lays the groundwork for further work on both growth and deficit⁷ reduction.  That is an achievable goal.  That can get done in 10 days," he said.

Saying "nobody gets 100 percent of what they want," Obama said once interim legislation is achieved and passed by the House and Senate, he will sign it immediately into law before January 1.

"The challenge that we have got right now is that the American people are a lot more sensible, and a lot more thoughtful, and much more willing to compromise and give and sacrifice and act responsibly than their elected representatives are," said the president.

Earlier, Boehner put the responsibility for averting⁸ the fiscal cliff back to President Obama and the Democratic-controlled Senate.

"So, unless the president and Congress take action, tax rates will go up on every American taxpayer⁹, and devastating¹⁰ defense¹¹ cuts will go into effect in 10 days," he said.

Reid urged Boehner to allow a House vote on President Obama's proposal to raise taxes on annual incomes of $400,000 or higher and said Boehner should not blame Obama or Democrats¹².

"To blame us for that travesty¹³ that took place over there, Mr. President, that is pretty incredible," he said.

Analysts¹⁴ warn of severe impacts on the U.S. economy and on global confidence in Washington's ability to resolve disagreements.

Alan Blinder is a professor of Economics and Public Affairs at Princeton University and a former vice¹⁵ chairman of the U.S. Federal Reserve.

"It does not do a country, especially a big, powerful country like the U.S., any good to look clownish in the eyes of the world, and we are looking clownish," said Blinder.

Harvard University economics professor Martin Feldstein warned of the impact of the U.S. falling back into recession.

"If our economy goes into a recession, especially a serious recession, a deep recession, that is going to hit imports from the rest of the world and that is what they care about, and of course to the extent that it messes up financial markets, that has a contagion¹⁶ effect," he said.

After Obama's remarks Friday, a Boehner spokesman said the president still has failed to offer a balanced deficit reduction plan, but that the House Speaker "remains¹⁷ hopeful" and will return after Christmas to try to find a solution.

Having issued the challenge to lawmakers to devise an interim fiscal deal, President Obama departed the White House for Hawaii to begin a holiday vacation with first lady Michelle Obama and their daughters, Sasha and Malia.

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