After President Obama was elected to his first term as a U.S. President in 2008, he faced a plunging stock market, a shattered housing market, financial and auto sectors on the brink of collapse, and a Capitol Hill that was controlled by Democrats.
After President Obama was re-elected to a second term as a U.S. President, he faced a slow moving economic recovery, heightened fears of a fiscal cliff, political gridlock on Capitol Hill, and two consecutive days of selling in the stock market.
On Wednesday equities fell, with S&P 500 falling 2.3 percent. The following day on Thursday the S&P 500 dropped for a second day, closing below its 200-day moving average for the first time in five months.
Congress received low approval ratings before Tuesday’s elections and yet House Republicans still managed to hold on to their majority in Congress during the Tuesday election while Democrats retained their majority in the Senate.
Republicans have traditionally been committed to avoiding tax increases while working to limit the size and cost of government. But given the magnitude of the outrage at Congress during the debt ceiling debacle in 2011 and the recent re-election of President Obama to a second term, it is becoming increasingly more difficult for Republicans to cling to their no tax increase pledge as the only solution towards solving a deficit that has risen to the trillions.
Opening The Door to Tax Increases
House Speaker John Boehner (R-Ohio) said on Wednesday that he is open to raising more tax revenues to reduce the federal deficit, a key Democratic requirement, but only if it’s accompanied with tax reform that lowers income tax rates and includes entitlement reform.
However, on Thursday House Speaker Boehner said that House Republicans are willing to talk about the possibility of raising tax rates but remain opposed to doing so.
Later in the evening, while speaking on ABC’s “World News with Diane Sawyer” House Speaker Boehner reiterated his opposition to raising taxes.
“Raising taxes on small business people is the wrong prescription given where our economy is,” Boehner said. “Because when you look at the president’s proposal, half of the people who would get hit with higher taxes file their taxes as individuals, or as business taxes.”
House Speaker Boehner spoke about the need for a comprehensive approach to form a compromise with President Obama and the Democrats.
“A comprehensive approach is long overdue, and I’m confident that the president, myself, others can find the common ground to take care of this issue once and for all” Boehner said.
President Obama has offered to bring major changes to Medicare such as allowing the eligibility age to rise from 65 to 67 and using a smaller level of inflation adjustment for Social Security benefits despite facing criticism from liberals in his own party.
However, he has recently eliminated those new provisions in his latest budget request.
President Obama will address the nation later today from the White House where he is expected to speak about the fiscal cliff and likely defend his party’s approach towards handling the fiscal cliff.