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Obama calls for compromise on economy

President Obama has called on Democrats and Republicans to cooperate in crucial deficit talks. Tax and spending cuts are set to expire January 1, which analysts say could cause another recession.

Speaking at his first White House press conference since winning re-election on Tuesday, US President Barack Obama warned the American public of the potentially serious economic consequences of deficit talks if Congress fails to cooperate.

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Obama refuses to tax middle class

President Obama said he refused to leave the burden of paying the debt to the country's students, seniors and middle class, a repetition of his campaign promise of alleviating the nation's fiscal woes.

"We can't just cut our way to prosperity. If we are serious about reducing the deficit, we have to combine spending cuts with revenue," said Obama.

Despite disagreements with Republican leaders in the past, the president emphasized that neither side wanted tax increases to affect Americans who earn below $250,000 a year.

As of January 1, 2013, a string of tax cuts implemented by former President George W. Bush are set to expire, while the US government is mandated simultaneously to significatly cut public spending. These combined changes would be liable to help reduce the runaway US deficit, but analysts have said that the impact of increased taxation and reduced public spending could push the US economy over a so-called "fiscal cliff" - sparking higher unemployment and a return to recession.

'Challenges can only be solved together'

The president directed his message in large part to Congress, with whom he has had a rocky relationship during his first term, saying the American people "voted for action, not politics as usual."

The Republican-controlled House of Representatives and Democratic-controlled Senate have repeatedly been at odds with each other and the president how to solve the financial crisis. The unwillingness to compromise peaked in the summer 2011 over a deal to raise the debt ceiling in exchange for a deficit-reduction package, a fight which nearly caused a government shutdown.

Perhaps to set a fresh tone for the end of the remainder of his first term, which ends on January 20, 2013, Obama said he was looking forward to his meeting with congressional leaders next week at the White House to discuss the fiscal cliff.

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

"I've got my pen ready to sign the bill right away. I'm ready to do it," he said, as he withdrew a pen from his pocket.

This week, President Obama took 332 of the Electoral College votes and 50.5 percent of the popular vote, beating Republican contender Mitt Romney in the nation's most expensive presidential race to date. A presidential candidate needs at least 270 vote to win.

kms/rc (AFP, Reuters)

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