US President Barack Obama on Wednesday offered opposition Republicans a short-term compromise on avoiding the fiscal cliff, but said any deal needed to include tax increases for the rich.
Obama said he was willing to negotiate a fix before year-end to avoid the harsh tax hikes and spending cuts programmed for January 1, and then seek a comprehensive deal on long-term deficit reduction next year.
"We face a clear deadline that requires us to make some big decisions on jobs, taxes and deficits by the end of the year... As I've said before, I'm open to compromise and I'm open to new ideas," Obama said at his first press conference after being re-elected on November 6.
"Let's go ahead and lock that in. That will be good for the economy. It will be good for consumers. It will be good for businesses. It takes the edge off the fiscal cliff."
He said it was crucial to reach agreement within weeks on extending existing tax breaks for 98 percent of American households whose incomes are below $250,000 a year, to avoiding forcing a steep consumer spending crunch from January 1.
But he said that similar tax breaks for the wealthiest Americans should expire, a point which many Republicans have rejected.
"We should not hold the middle class hostage while we debate tax cuts for the wealthy," he said.
"We cannot afford to extend the Bush tax cuts for the wealthy."
The fiscal cliff comprises a poison-pill law agreed by Republicans and Democrats in August 2011 that forces harsh budget cuts from January 1, and the expiration of tax cuts originally designed as temporary measures to boost economic growth.
If both take place, economists say they could suck as much as $600 billion out of the economy next year and force it into recession.
The spending cuts could force temporary furloughs of government workers and also decimate key parts of the US defense budget.
Obama appeared to agree with the Republican leader of the House of Representatives, Speaker John Boehner, who on Wednesday proposed the two sides carve out a short-term compromise to mitigate the worst effects of the cliff, and then open talks on long-term deficit reduction next year.
But Boehner proposed that the government only seek more revenues from the wealthy by removing special breaks they receive in the tax code, not by letting the tax breaks for them expire.
Obama dismissed that approach as unlikely to have much impact on the US deficit, which has topped $1 trillion a year for four straight years.
"It's very difficult to see how you make up that trillion dollars if we're serious about deficit reduction, just by closing loopholes and deductions. The math tends not to work," he said.
Obama said talks next year could cover government spending, a rewrite of the tax code, and politically sensitive modifications to Social Security and Medicare programs that are the largest long-term challenges to government spending.
"We can then set up a structure whereby we're dealing with tax reform, closing deductions, closing loopholes, simplifying, dealing with entitlements," Obama said.
"And I'm ready and willing to make big commitments to make sure that we're locking in the kind of deficit reductions that stabilize our deficit, start bringing it down, start bringing down our debt."
"I want a big deal. I want a comprehensive deal," he said.