U.S. President Barack Obama delivers a statement on the U.S. "Fiscal Cliff" in the East Room of the White House, November 9, 2012.
U.S. President Barack Obama delivers a statement on the U.S. "Fiscal Cliff" in the East Room of the White House, November 9, 2012.

U.S. President Barack Obama and congressional Republicans have set out initial positions ahead of difficult negotiations on deficit and debt reduction and taxes. As Mr. Obama has invited congressional leaders from both major political parties to the White House for talks next week to forge consensus.

After Obama's election victory, both sides are talking about common ground, although actually finding it and seizing opportunities for bipartisan compromise will be hard.

What Is the US Fiscal Cliff?

A combination of expiring tax cuts and the first phase of billions of dollars in mandatory spending reductions is fast approaching at the end of the year. Americans at all income levels face a tax increase without an agreement.  

Obama said he has invited congressional leaders to the White House this coming week to start building consensus over how to avert that so-called fiscal cliff.

The president said he was encouraged by remarks by the Speaker of the House of Representatives, Republican John Boehner, about the need to find new revenue.

Obama supports reforms to strengthen entitlement programs such as Medicare, but he reiterated his insistence on raising taxes for wealthier Americans and not making the middle class shoulder the burden of paying down the deficit.

"I want to be clear. I am not wedded to every detail of my plan. I am open to compromise. I am open to new ideas. I am committed to solving our fiscal challenges, but I refuse to accept any approach that isn't balanced," he said.

"I am not going to ask students and seniors and middle class families to pay down the entire deficit while people like me making over $250,000 aren't asked to pay a dime more in taxes. I'm not going to do that," the president added.

Speaker of the House John Boehner (R-OH) during a news conference on Capitol Hill in Washington, November 9, 2012.

Earlier, Speaker Boehner said the fiscal cliff needs to be averted and outlined what he called a "responsible path forward" without raising tax rates.

He challenged the president to respond in a spirit of finding common ground. "Earlier this week, the president and I had a short conversation. It was cordial," he said.

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

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Obama, House Speaker Take Positions on Budget Befo

Boehner said raising taxes on higher income earners will slow down job creation.  He said the contentious issue of raising the U.S. debt limit, which caused the U.S. government's credit rating to be downgraded in 2011, will have to be addressed.

President Obama suggested that to provide more certainty in the economy, the question of extending tax cuts for the middle class could be separated from doing so for wealthier Americans, as negotiations continue on a broader deficit reduction package.

In the U.S. election, he said, Americans voted for an end to dysfunction in Washington.
"What the American people are looking for is cooperation. They are looking for consensus," he said. "They are looking for common sense. Most of all, they want action.  I intend to deliver for them in my second term, and I expect to find willing partners in both parties to make that happen."

A Congressional Budget Office report this week warned that the U.S. economy could fall back into recession, and the jobless rate could rise above 9 percent, if no deal is struck on averting the fiscal cliff.