Obama plans "fiscal cliff" statement as showdown looms

WASHINGTON (Reuters) - President Barack Obama will join the battle over the U.S. "fiscal cliff" on Friday for the first time since voters gave him a second term in office, setting the stage for a showdown with congressional Republicans over sharp tax hikes and spending cuts slated to take effect early next year.

Obama is to make a statement from the East Room of the White House at 1:05 p.m. EST. His opening move in what is expected to be a tense negotiation to avert the so-called "fiscal cliff" was telegraphed Thursday by a top adviser, David Plouffe, who claimed a mandate from Tuesday's election victory to raise taxes on the wealthy.

That set up a clash with the Republican-controlled House of Representatives, whose leader, Speaker John Boehner, reiterated on Thursday his opposition to any increase in tax rates.

Boehner has scheduled his own news conference for Friday morning ahead of the president's statement.

The "fiscal cliff" of steep government spending cuts and tax rises due to be implemented under existing law in early 2013 may cut the federal budget deficit, but economists warn it also could tip the economy back into recession.

While disagreeing on immediate measures to avert the looming fiscal crisis, Obama and Republicans may find common ground in calls for enactment over the next six months of a larger package of deficit reduction measures, including a rewrite of U.S. tax laws.

The president called for negotiations on such a "grand bargain" during his campaign.

Obama, who defeated Republican challenger Mitt Romney in a race in which the two candidates offered different visions for spurring the sluggish economy, is not expected to put forward a new or specific plan.

Instead, he is more likely to urge Congress to tackle the fiscal cliff during its post-election session that begins next week.

The non-partisan Congressional Budget Office reiterated Thursday that if left unaddressed, the abrupt fiscal tightening would knock the economy back into recession, with unemployment rates soaring back to about 9 percent.

But it also warned of a crisis ahead if the United States does not stem the growth of its exploding deficit.

Congressional Republicans, who stress spending cuts, have already begun to stake out their position on ways to spare the already modest economic recovery from a fiscal shock.

The president's advisers told reporters earlier on Thursday that dealing with the fiscal cliff would be an immediate priority. The administration sees Obama's re-election as an endorsement of his position that affluent Americans should see their taxes rise, they said.

"One of the messages that was sent by the American people throughout this campaign is ... (they) clearly chose the president's view of making sure that the wealthiest Americans are asked to do a little bit more in the context of reducing our deficit in a balanced way," senior White House adviser David Plouffe said.

(Reporting by Mark Felsenthal; Editing by Fred Barbash and Vicki Allen)

Source: http://news.yahoo.com/obama-plans-fiscal-cliff-statement-showdown-looms-134313348--business.html

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