Obama Heads to Asia Amid Looming Fear of 'Fiscal Cliff'

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Obama Heads to Asia Amid Looming Fear of 'Fiscal Cliff'

By S.A. MILLER Post Correspondent

November 9, 2012

WASHINGTON — President Obama yesterday announced he’s jetting off on a victory lap around Southeast Asia, despite a new government report warning the Jan. 1 fiscal cliff will plunge the US into a recession and drive the unemployment rate up to 9.1 percent.

Obama and Congress have just 52 days to reach a deal to avoid sailing off that precipice, when a devastating double whammy of tax hikes and budget cuts will rock the economy and hit just about every American.

The negotiations will be difficult. Obama signaled he’s sticking to his demand for raising taxes on the wealthy. That’s long been a nonstarter with Republicans.

'Raising taxes on small businesses will kill jobs in America. It is as simple as that.' — House Speaker John Boehner

ZUMA Press.com

'Raising taxes on small businesses will kill jobs in America. It is as simple as that.' — House Speaker John Boehner

He will issue a statement today “about the action we need to take to keep our economy growing and reduce our deficit,” the White House said last night.

His chief political strategist, David Axelrod, said re-election gives Obama the upper hand.

“If the attitude is that nothing happened on Tuesday, that would be unfortunate,” Axelrod told MSNBC.

House Speaker John Boehner (R-Ohio) yesterday took all tax-rate increases off the table, though he said Republicans would accept other revenue measures, such as closing loopholes and eliminating deductions.

“Raising taxes on small businesses will kill jobs in America. It is as simple as that,” he told USA Today.

But those tense negotiations won’t interfere with Obama’s boarding Air Force One for a three-day tour of Bangkok, Rangoon and Phnom Penh.

Along the way, he’ll meet with Thai Prime Minister Yingluck Shinawatra to mark 180 years of diplomatic relations, chat with Burmese dissident Aung San Suu Kyi and attend the East Asia Summit in Cambodia. He takes off Nov. 17.

Meanwhile, the nonpartisan Congressional Budget Office released a report highlighting the economic shock that awaits America. The automatic spending cuts and tax increase will shrink the already anemic economy by 0.5 percent and cause the jobless rate to spike to 9.1 percent, the report predicted.

The average American family will pay an extra $2,000 to $3,000 in taxes after all of the Bush-era tax cuts expire Jan. 1, and about 1,200 government programs will experience spending cuts.

These austere measures, however, will succeed in slashing the deficit by $503 billion in 2013, and the economy should start to pull out of recession by 2014.

“Economic growth will pick up, and the labor market will strengthen,” said the CBO report.

Democrats and Republicans both want to find a way to soften the hard times currently scheduled to start New Year’s Day.

If they succeed, CBO predicted it will boost the economy next year.

America’s gross domestic product would grow by 2.2 percent if the Bush-era tax rates are extended and by nearly 3 percent if Obama’s payroll tax cut and extra long-term unemployment benefits are extended, the report predicted.