(Reuters) – Taking to Twitter to press his case in “fiscal cliff” talks with Congress, President Barack Obama said on Monday that tax breaks benefiting middle class families such as the mortgage interest deduction could be at risk if rates for top earners do not rise.
Obama is locked in negotiations with Congress to prevent a year-end fiscal crunch. If the administration and lawmakers fail to agree, across-the-board tax hikes and spending cuts would go into effect that analysts say would tip the economy back into recession.
The president answered questions on Twitter for about an hour on Monday as part of his campaign to pressure Republicans in Congress to accept an increase in taxes for the wealthiest Americans as part of a deficit-cutting package.
One questioner, who identified herself as Emma Robertson, expressed concern that popular tax breaks for homeownership could be threatened in an eventual deal.
“As a home owner, I worry deductions for home owners are at risk. Is that the case?” she asked in a tweet.
Obama responded that such tax breaks were important for middle class families and could be at risk if taxes for the wealthiest Americans are not increased.
“Breaks for middle class impt for families & econ. if top rates don’t go up, danger that middle class deductions get hit – bo,” the president said via Twitter.
Obama signs his initials – BO – to tweets that he writes himself. In this tweet, “impt” stands for important and “econ” stands for economy.
Tax cuts the originated under former President George W. Bush are due to expire at the end of the year and Obama, who was re-elected to a second four-year term last month, has pledged to let the tax rates on the top two brackets rise to their previous levels.
HIGHER RATES VERSUS FEWER DEDUCTIONS
While Republicans have agreed that more revenue can be part of any deal, they have balked at raising actual tax rates, saying they prefer to trim the federal deficit by eliminating tax deductions and loopholes in the tax code.
That distinction is central to a stalemate in the negotiations.
Asked by one questioner why he was opposed to taking away deductions from the top 2 percent of U.S. earners rather than raising their rates, Obama said such a move would not raise enough revenue unless charitable deductions were scrapped.
“Less revenue = more cuts in education,” he tweeted.
He told another questioner that he was open to compromise and did not expect to get everything he had asked for in his budget proposal.
He also used his tweets to reiterate his position that taxes for middle income families should be extended.
One recent college graduate named Mandi, who used the Twitter handle “dontbeaprat” and whose picture showed a shock of purple hair, asked whether such tax cuts would help her since she did not have a full-time job.
Obama responded that tax cuts without revenue increases would result in a reduction in student loans, while work/study and college tax credits would expire.
“Bad for growth,” he tweeted, then added, “like your hair!”
(Editing by Fred Barbash and Eric Walsh)
