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Fiscal crisis delays changes in Obama's team

india Updated: Nov 09, 2012 23:26 IST
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The White House is making America's high-stakes fiscal crisis its top priority coming out of the election, underscoring the vital importance of averting severe year-end tax increases and spending cuts as President Barack Obama heads toward a second term.

Obama is also weighing replacements for high-profile officials expected to leave his cabinet and the White House soon. treasury secretary Timothy Geithner and secretary of state Hillary Clinton both want to step down but have indicated a willingness to push their departures into next year, or at least until successors are confirmed. Defence secretary Leon Panetta also wants to retire next year.

The president privately delved into both issues Thursday, his first full day back in Washington following his re-election.

In his victory speech Tuesday night, Obama offered a call for reconciliation after a divisive campaign. But he made clear he had an agenda in mind, citing a need for changes in the tax code, as well as immigration reform and climate change.

The White House believes Obama has a clear mandate on one key issue: raising taxes on families making more than $250,000 a year. Obama senior adviser David Plouffe said voters "clearly chose the president's view of making sure the wealthiest Americans are asked to do a little bit more" to help shrink the federal deficit.

The president has long advocated allowing tax cuts first passed by George W Bush to expire for upper-income earners. But he gave in to Republican demands in 2010 and allowed the cuts to continue, angering many Democrats.

Both parties agree that the combination of tax increases and spending cuts set to hit on January 1, the so-called fiscal cliff, could plunge the economy back into recession.

Republican House of Representatives Speaker John Boehner said Wednesday he wanted to compromise with the re-elected president. And he said the House would be willing to accept higher tax revenue under the right conditions.

The White House wants consistency in its "fiscal cliff" negotiating team, meaning Geithner is likely to put off his departure from treasury until Obama and lawmakers can reach some agreement.

White House chief of staff Jack Lew is seen as a leading candidate to replace Geithner. Lew served as budget director under both Obama and Bill Clinton. At the state department, the leading candidates to take over as the top US diplomat are Democratic senator John Kerry and Susan Rice, the US ambassador to the UN.