Australia Markets closed

Obama warns of human cost of fiscal cliff

US President Barack Obama speaks about extending middle class tax cuts and the fiscal cliff at the home of Tiffany Santana in Falls Church, Virginia.

President Barack Obama traveled to the suburban apartment of a high school teacher Thursday, to warn of the human cost of failing to solve the US "fiscal cliff" tax and austerity crisis.

Obama sat at the kitchen table of Tiffany Santana in Virginia to issue a new warning that he would not agree to any deal with Republicans that did not raise the top tax rate on the richest Americans.

The president said that Tiffany and Richard Santana and their family, including their son six-year-old Noah, had "dreams and ambitions" and were working hard to meet their responsibilities.

"For them to be burdened unnecessarily because Democrats and Republicans aren't coming together to solve those problems gives you a sense of the costs on personal terms," Obama said.

If there is no deal to avert the so-called "fiscal cliff," a mix of automatic tax rises and massive spending cuts, taxes on all Americans will go up on January 1.

Obama wants to extend George W. Bush-era tax cuts for almost all Americans, but let the rates on the two percent of richest earners go up from 35 to 39.6 percent to finance cuts to the bloated deficit.

"The message we all want to send to Congress is this is a solvable problem," Obama said, in the tidy apartment in the Virginia suburbs of Washington.

"(It's) important we get this done now, we don't wait. The closer it gets to the brink, the more stressed we're going to be."

"Everyone is going to have to share in some sacrifice. But it starts with folks who are in the best position to sacrifice."

Tiffany Santana said that she can ill afford to pay higher taxes, saying the money she would lose next year would be the equivalent of two months' rent.

Obama spoke to House of Representatives speaker John Boehner on Wednesday, but there are no clear signs that the two sides are any closer to narrowing their positions as they search for a compromise.

In what they bill as a concession, Republicans say they are willing to bring more revenue into the government, but insist it can only be done by closing tax loopholes and capping deductions.

Obama says such a method would not raise sufficient funds to significantly reduce the deficit and is insisting on rate hikes.

The president presented an initial offer last week, while Boehner presented a counter-bid. Both have been rejected outright by the other side.

The Republicans' proposal would raise $800 billion in new revenue by closing tax loopholes and ending some deductions as part of the broader $2.2 trillion Republican package, including $1.2 trillion sliced from federal spending, with half of that coming directly from Medicare, the federal health program for the elderly.

Boehner insisted that Obama's plan, including $1.6 trillion in new taxes and $600 billion in spending cuts, "couldn't pass either house of the Congress."