Last updated: November 28, 2012 1:36 am

US fiscal cliff fight taken on the road

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President Barack Obama and Republicans in Congress are taking the political fight over the fiscal cliff on the road, for now eschewing face-to-face talks amid mounting nervousness about the slow pace of negotiations.

Both Mr Obama and Republican lawmakers are pressing ahead with separate public campaigns to persuade Americans to back their conflicting positions on budget policy.

The centrepiece of Mr Obama’s efforts will come on Friday, when he visits a Pennsylvania-based toy manufacturer that the White House says would be hit hard during the holiday season if consumers retreat in the face of the looming tax rises and spending cuts.

Republicans in the House of Representatives said on Tuesday they were also planning a round of events with small business owners across the country to force Mr Obama to back down from his proposal to raise tax rates on the wealthy – even if they have softened their opposition to any new revenue.

The competing moves could be unnerving since this could take away precious time from direct negotiations between Mr Obama and congressional leaders, who have met only once on the fiscal cliff nearly two weeks ago. If no deal is reached by December 31, the US economy will suffer a fiscal contraction worth about $600bn next year, probably tipping it back into recession.

Mr Obama spoke to John Boehner, the Republican House speaker, and Harry Reid, the Democratic Senate majority leader, at the weekend, and there has been a generally optimistic tone about the prospects for an agreement. But a big breakthrough has been elusive.

“There’s been little progress with the Republicans, which is a disappointment to me,” said Mr Reid on Tuesday, in comments that caused a dip in equity markets. “They talked some happy talk about doing revenues, but we only have a couple of weeks to get something done. So we have to get away from the happy talk and start talking about specific things.”


The fiscal cliff explained

What is a fiscal cliff and what does it mean for the US economy?

As well as his visit to the toymaker in the Philadelphia suburbs, Mr Obama hosted a group of small business owners at the White House on Tuesday. On Wednesday, he will meet other “middle class Americans” to highlight the danger posed by the fiscal cliff and put pressure on Republicans to compromise. The White House is also promoting $25bn in small business tax breaks contained in its budget that may be folded into any deal as new stimulus.

But Mitch McConnell, the top Republican in the Senate, was not impressed by Mr Obama’s roadshow. “Rather than sitting down with lawmakers of both parties and working out an agreement, he’s back out on the campaign trail, presumably with the same old talking points we’re all familiar with,’ Mr McConnell said.

Mr Obama’s push reflects the freshly re-elected president’s confidence that he can use his bolstered political capital either to extract concessions from Republicans – such as higher taxes on the rich – or at least see them blamed if no deal is reached.

But Republicans are determined not to allow Mr Obama’s presidential pulpit to dominate the discussion, and say they too are taking their message to small businesses across America. A Republican aide in the House of Representatives said that in the coming days and weeks, their rank-and-file members would hold events to “draw attention to the irresponsible position of Democrats in Congress” and “emphasise the threat to jobs” posed by higher taxes on small business.

In depth: US fiscal cliff

US Capitol

The White House and Congressional leaders are embarking on high-stakes talks to avoid a looming fiscal cliff

“Members will be presented with a communications plan this week and the effort will be aided by a coalition representing American small business,” the aide said.

Both the White House and Republicans are also holding meetings with top leaders of corporate America. Mr Obama on Wednesday will hold his second meeting with top business executives, including Lloyd Blankfein of Goldman Sachs, Muhtar Kent of Coca-Cola, Doug Oberhelman of Caterpillar and Joe Echevarria of Deloitte.

Meanwhile, Mr Boehner is meeting with members of the “Fix the Debt” campaign, which is funded by many top business executives who support a bipartisan deficit deal.

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