US President Barack Obama is set to cut short his Christmas holiday in Hawaii in order to hold talks on the so-called fiscal cliff, a set of tax increases and spending cuts set to take effect next year.
Obama is expected to arrive in the capital early on Thursday, according to authorities, raising the possibility of renewed negotiations on a budget deal that could avert austerity measures.
Congress was also expected to return to Washington on Thursday.
Despite weeks of negotiations, Obama’s administration has been unable to strike a deal with congressional Republicans that would slash the budget deficit and prevent the fiscal cliff.
The fiscal cliff is the result of a poison pill agreement reached earlier this year that would require major spending reductions, as tax cuts passed under former president George Bush expire at the end of the year – should Democrats and Republicans fail to reach a deal to cut the deficit.
The White House has offered a deal with $1.2t in revenues – by fulfilling an Obama campaign promise to allow the Bush tax cuts to expire for the wealthy — and nearly $1t in spending cuts.
Republicans are opposed to raising taxes in principle and have questioned whether the spending cuts proposed by the White House are real.
They have instead offered a deal that would raise $1t in tax revenue – mainly by closing loopholes and ending deductions – and another $1t in spending cuts, including cuts to Medicare and other social programs.
Venting frustration with Republicans, Obama on Friday urged legislators to pass scaled-down legislation that would at least prevent taxes from going up on the vast majority of Americans, those making $250,000 or less per year.
The move would satisfy Obama’s demand to raise taxes on the richest US citizens, as all Bush-era taxes will go up on January 1, and Obama only envisions extending the lower rates for middle class earners.
House Republicans led by Speaker John Boehner have meanwhile punted to the Democratically-led Senate, asking Obama and Senate Majority Leader Harry Reid to write up legislation that can pass both houses.
Obama’s suggestion would extend tax breaks to 98 percent of Americans – those earning below $250,000 a year.
In talks on a larger compromise, the president had offered to raise that threshold to $400,000.