The president said House Republicans can prevent the fate of a tax hike. Obama warns of GOP 'lump of coal'

HATFIELD, Pa. — President Barack Obama and House Speaker John Boehner (R-Ohio) finished another week without a fiscal cliff deal, not even agreeing on how the negotiations are going.

Obama expressed optimism as he took his case on the road here Friday, saying Democrats and Republicans “can and will work together.”


Boehner, however, countered: “Right now, we’re almost nowhere.”

( Also on POLITICO: John Boehner declares stalemate)

Obama struck a playful tone throughout his speech at a toy factory to warn Americans that they could be in for a “lump of coal” for Christmas if Congress fails to extend current middle-class tax rates.

“Everybody here, you’ll see your taxes go up on Jan. 1,” Obama said at a Rodon Group plant, where more than 95 percent of the parts for K’NEX construction toys are made. “I’m assuming that doesn’t sound too good to you. That’s sort of like the lump of coal you get for Christmas. That’s a Scrooge Christmas.”

But, the president said, House Republicans can prevent that fate “by doing what we all agree on” and extending current tax cuts on the first $250,000 of income. “Let’s go ahead and take the fear out for the vast majority of American families,” he said.

( Also on POLITICO: White House: No surprises in Geithner proposal)

As he has before, Obama vowed to quickly sign legislation extending the tax cuts. “There are no shortage of pens in the White House, and I carry one around for an emergency, just in case,” he said.

“I’ve been keeping my own naughty and nice list for Washington,” Obama said. “So you should keep your eye on who gets some K’NEX this year. There are going to be some members of Congress who get them and some who don’t.”

Boehner was not in the mood for jokes, though.

“There’s a stalemate. Let’s not kid ourselves,” the speaker said.

Treasury Secretary Timothy Geithner offered a proposal to Republican leaders this week to make permanent the tax cuts on income up to $250,000, delay across-the-board spending cuts known as the sequester, and fund about $200 billion in stimulus measures, a senior administration official said.

The administration also proposed an Aug. 1 deadline for Congress to pass an overhaul of the Tax Code that would raise an additional $600 billion in revenue, and eliminate $350 billion from health care entitlements and $250 billion from other mandatory spending, although specific cuts were not detailed, the official said.

Boehner dismissed the White House’s current offer, saying it wasn’t serious.

“I’m willing to move forward in good faith,” he said, and he said he is “seeking a bipartisan solution that can pass both chambers of Congress and be signed into law by the president in the coming days.”

The tax-cut extension is part of a bigger set of issues that Obama and Congress are trying to tackle in the coming weeks to avert the combination of tax hikes and spending cuts set to take effect at the start of next year. Because a bigger deal will require “prolonged negotiations,” Obama wants Congress to act first to avoid hitting low- and middle-income Americans hard in 2013.

“It’s not acceptable to me, and I don’t think it’s acceptable to you for just a handful of Republicans in Congress to hold middle-class tax cuts hostage simply because they don’t want tax rates on upper-income folks to go up,” he said.

After Obama’s speech, senior adviser David Plouffe sent an email to the White House list, encouraging supporters to continue speaking out in support of the president’s position. “You’re changing an entire policy conversation. And we have to keep it up.”

( PHOTOS: Fiscal cliff’s key players)

Clearly having fun at the toy factory, Obama said he wished K’NEX had been around when he was a kid.

He also joked that Vice President Joe Biden had hoped to buy some K’NEX during a photo op at a Costco store in Washington Thursday. “He wanted to buy some of this stuff, but I told him he had too much work to do. I wasn’t going to have him building roller coasters all day long.”

Epstein reported from Arlington, Va. Budoff Brown reported from Hatfield, Pa.