'Most people believe I'm right': President Obama says he will increase taxes on the rich to avoid the fiscal cliff



An emboldened President Barack Obama has demanded that Republicans agree to raise taxes on the rich, insisting that to refuse to do so would be holding ‘the middle class hostage’.

In his first full White House press conference for more than eight months, the President claimed a mandate for raising taxes because ‘the majority of voters agreed with me’ in re-electing him and all but ruled out keeping tax rates for the wealthiest Americans at their current level.

‘I think that there are loopholes that can be closed, and we should look at how we can make the process of deductions, the filing process easier, simpler,’ he said.

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‘But when it comes to the top two per cent, what I’m not going to do is to extend further a tax cut for folks who don’t need it, which would cost close to a trillion dollars.

Obama said it was essential that the approaching fiscal cliff – when Bush-era tax rates expire and automatic spending cuts kick in – had to be avoided and insisted that while there had to be bipartisan cooperation it would be on his terms.

‘We should not hold the middle class hostage while we debate tax cuts for the wealthy,’ Obama said, declaring that the Bush tax cuts for the less wealthy should be extended immediately. ‘We should at least do what we can agree on.’

Obama has urged for months to agree to extend tax breaks on income of up to $250,000 but Republicans have been reluctant to do so because it might limit the ability to extend tax breaks for the rich.

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Representative John Boehner, Speaker of the House of Representatives, has said he would be willing to accept new tax revenues but not higher tax rates, if Democrats accept the scaling back of entitlement programs like Medicare.

It remains hard to see how the two sides can reconcile their differences before January 1st.

If a deal is not reached, the U.S. could be plunged back into a recession.

Obama is expected to call for $1.6trillion in tax revenue over the next decade when he meets with Congressional leaders - the figure in his last budget proposal to Congress and double the $800 billion he negotiated with Republicans in summer last year.

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'What I'm not going to do is to extend Bush tax cuts for the wealthiest 2 percent that we can't afford and according to economists will have the least positive impact on the economy,' he said.



Standing in the East Room of the White House, Obama pointedly noted he had campaigned on a platform that called for allowing tax breaks to expire as scheduled on December 31 for the wealthiest income earners.



'A modest tax increase on the wealthy is not going to break their backs. They'll still be wealthy.



House Speaker John Boehner and Senate Republican leader Mitch McConnell have both said they are eager to compromise with the president to avoid the immediate tax increases and spending cuts scheduled to take effect at the end of the year. But at the same time, they have said they won't agree to raise tax rates for the wealthy.



Boehner arranged a late afternoon news conference in the Capitol to respond to the president's remarks.



The congressional leaders are slated to meet with Obama at the White House on Friday for the first time since the election, and are expected to agree to designate aides to begin the search for a compromise.



New tact: Republican Speaker John Boehner (seen today at a swearing-in ceremony) said the GOP is eager to compromise with the president to avoid the immediate tax increases

Asked if he viewed it as a deal-breaker if Republicans refused to allow the top tax rate to revert to 39.6 per cent from the current 35 per cent, he said, 'I just want to emphasize I am open to new ideas if the Republican counterparts or some Democrats have a great idea for us to raise revenue, maintain progressivity, make sure the middle class isn't getting hit, reduces our deficit.'



Earlier, Senator Dick Durbin of Illinois, part of the Democratic leadership team, said that many 'many Republicans believe now is the time to sit down and talk more revenue.'



Durbin said the number of GOP lawmakers in the Senate willing to work toward accommodation now totals 20.



But Durbin also said 'there is a great distance' between Republicans in the House and Senate, 'and basically it comes down to the question of whether Speaker Boehner is willing to look for a bipartisan solution.'



Talking numbers: Democratic Senator Dick Durbin said the number of GOP lawmakers in the Senate willing to work toward accommodation now totals 20

Durbin told MSNBC he thinks lawmakers should 'use this fiscal cliff' to resolve a problem that has plagued Congress for four years.



The president pledged to raise taxes on the rich during his first term but backed off his stance in late 2010 after Republicans seized control of the House in the midterm election.



Obama met on Tuesday with allies from labor and liberal groups, and invited a group of CEOs to the White House for a mid-afternoon session, also to focus on the threat posed to the economic recovery by the combination of tax increases and spending cuts.



During his meeting with labor leaders, Obama said he was not going to bend on letting tax cuts expire for top wage earners, according to a participant in the meeting who spoke on the condition of anonymity to discuss the private session.



The president said the tax issue was clear during the election and said he had extended those enacted during the George W. Bush administration once and would not do so again, the participant said.





