Pres. Obama Must Work With Congress to Avert Financial Crisis - KTVN Channel 2 - Reno Tahoe News Weather, Video -

President Obama Must Work With Congress to Avert Financial Crisis

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With a second term ahead of him, President Barack Obama faces the urgent task of working with Congress to address an impending financial crisis that economists say could send the country back into recession.

Automatic tax increases and across-the-board spending cuts known as the "fiscal cliff" are set to take effect January 1, unless there's a budget deal to avoid it. 

Voters gave Obama four more years in office, but also elected a divided Congress, with Democrats still in control of the Senate and Republicans in charge in the House.

While Obama told supporters in his election night acceptance speech, "You made your voice heard," House Speaker John Boehner says voters issued a dual mandate "for both parties to find common ground" and take steps to help the economy grow and create jobs.

But Senate Republican leader Mitch McConnell is sounding less conciliatory. He says voters have not endorsed what he calls the "failures" and "excesses of the president's first term."

Newly elected Democrats are signaling they want to see a compromise. Sen.-elect Tim Kaine of Virginia says voters sent a message they want "cooperative government." 

Meanwhile, Fitch Ratings says President Obama must pivot off his re-election victory and quickly forge an agreement with Congress to prevent a series of tax increases and spending cuts that kick in next year.

The credit rating agency issued a statement saying the president will have "No Fiscal Honeymoon." Fitch says Obama must work toward a credible plan to avoid the so-called fiscal cliff or risk losing the federal government's top `AAA' rating next year.

The agency changed its outlook for the U.S. rating to negative last year after Congress and the Obama administration failed to meet a deadline for a plan. They face $600 billion in tax increases and spending cuts that go into effect on Jan. 1.

The government's failure to come up with a plan to reduce the deficit led Standard & Poor's to cut its rating of long-term U.S. Treasury securities last year from `AAA' to `AA+'. It was the first-ever downgrade of U.S. government debt.

Fitch says Obama and Congress also must reach a deal on raising the nation's borrowing limit.

The U.S. has never failed to meet its debt obligations. The battle over raising the debt limit in August 2011 went to the last minute before a compromise was reached. 

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House Speaker John Boehner is offering to pursue a deal with a victorious President Barack Obama that will include higher taxes "under the right conditions" to help reduce the nation's staggering debt and put its finances in order.

Boehner tells reporters a day after the president's clear re-election victory that those conditions include a revamped tax code to make it cleaner and fairer, fewer loopholes and lower rates for all.

He did not specify what loopholes House Republicans might consider. Boehner's comments are along the lines of proposals by vanquished Republican presidential candidate Mitt Romney that also were vague on specifics.

Still, Boehner's comments signaled a willingness to enter into talks. He suggested Congress could use its upcoming lame-duck session to get the ball moving on such a compromise.  (AP)

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