Obama: Americans voted for tax hikes on rich

President Barack Obama makes remarks on the "fiscal cliff" in the East Room of the White House (Kevin Lamarque …

Claiming a mandate from his election romp over Mitt Romney, President Barack Obama announced

Friday that he had invited Congressional leaders to the White House next week for talks on how to steer the battered economy away from a "fiscal cliff." Obama said he was open to compromise with Republicans—but that any final deal needed to raise taxes on the richest Americans.

"This was a central question during the election," the president said in brief remarks in the East Room of the White House. "It was debated over and over again, and on Tuesday night we found out that a majority of Americans agree with my approach.

"Our job now is to get a majority in congress to reflect the will of the American people," Obama said. "I'm not wedded to every detail of my plan. I'm open to compromise. I'm open to new ideas. I'm committed to solving our fiscal challenges. But I refuse to accept any approach that isn't balanced."

The president, who did not take questions on Friday, campaigned in part on a plan that would extend most of the Bush-era tax cuts, but allow them to expire for individuals making more than $200,000 or families pulling in $250,000. Republicans have said they want to prolong all of those rate reductions.

Obama said, as he has all year, that this means both sides agree on extending the middle-class reductions—and that doing so should not require "long negotiations or drama. ... Let's extend the middle-class tax cuts right now. Let's do that right now." (Republicans have resisted; extending those rates would reduce the party's leverage on tax hikes affecting the wealthy).

Republican Speaker John Boehner, speaking shortly before the president's appearance, said he was looking to Obama "to lead" and that he had a short, "cordial" conversation with the president earlier this week about ways to avoid the so-called fiscal cliff.

"I think we both understand that trying to find a way to avert the fiscal cliff is important for this country," Boehner said. "And I'm hopeful that productive conversations can begin soon so we can forge an agreement that can pass the Congress."

Boehner reiterated his opposition to raising tax rates as part of that deal, even on high-income earners, and says he sees the negotiations as a way to overhaul the tax code and the way the federal government pays for entitlement programs like Social Security and Medicare. (Boehner's emphasis on tax rates suggests a possible opening for a compromise that focuses on raising revenue by closing loopholes, which is also a part of Obama's plan).

Obama said he was "encouraged" by the speaker's comments.

The so-called "fiscal cliff" refers to a series of tax increases and deep spending cuts scheduled to occur Jan. 1, 2013 if Obama and his Republican foes fail to reach a deal. They include the expiration of a payroll tax cut and the Bush-era reductions in tax rates, the end of some unemployment benefits, and draconian reductions in domestic and military spending triggered because of the failure of the Congressional "Super Committee" to find $1.2 trillion in deficit reduction over 10 years.

Just how bad would it be if the president and House Republicans held hands and took the country over the cliff, Thelma & Louise style (or maybe à la Homer Simpson)?
The non-partisan Congressional Budget Office, Washington's gold standard for such analysis, warned in a report released Thursday that the consequences could be dire, including a drop in Gross Domestic Product of 0.5 percent in 2013, and a rise in unemployment to 9.1 percent by the end of next year.
The CBO report also noted that extending Bush-era tax cuts for individuals making under $200,000 per year or families making below $250,000—while letting the reductions on higher-income Americans expire—would boost the economy by 1 ¼ percent by the end of 2013. This reflects Obama's preferred course. Extending the tax cuts for the wealthiest Americans, noted the report, "would have a relatively small effect on output for dollar of budgetary cost."

"The American people understand that we're going to have differences and disagreements in the months to come. They get that," Obama said. "But on Tuesday, they said loud and clear that they won't tolerate dysfunction, they won't tolerate politicians who view compromise as a dirty word—not when so many Americans are still out of work."

"What the American people are looking for is cooperation, they're looking for consensus, they're looking for common sense. Most of all they want action," the president said. "I intend to deliver for them in my second term, and I expect to find willing partners in both parties to make that happen.

"So let's get to work."