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Obama playing hardball on taxes, fiscal cliff

Buoyed by his election win, President Obama is seizing the offensive in negotiations over tax cuts and the fiscal cliff.

Buoyed by his election win, President Obama is seizing the offensive in negotiations over tax cuts and the fiscal cliff. He’s calling the GOP out for "hold[ing] middle class tax cuts hostage" to the demands of the super-rich, and pushing for a deficit deal that relies far more heavily on tax hikes than on spending cuts.

"This was a central question in the election, maybe the central question," Obama told a crowd at a toy factory in Hatfield, Penn. Friday, referring to the standoff over raising tax rates for the richest 2% of Americans. "And at the end of the day, a clear majority of Americans ... agreed with a balanced approach to deficit reduction and making sure that middle class taxes don't go up."

"It's not acceptable to me, and I don't think it's acceptable to you, for just a handful of Republicans in Congress to hold middle-class tax cuts hostage, simply because they don't want tax rates on upper-income folks to go up," Obama added. "That doesn't make sense."

It’s not just the president’s rhetoric that’s tough. Obama hit the road to rally public support for his approach to the budget negotiations currently consuming Washington. Thursday afternoon, the White House offered Republicans a proposal to avert the fiscal cliff that makes little concession to GOP demands.

According to a summary of the plan leaked by Republicans, it would use a 4-1 ratio of tax hikes to spending cuts to curb the deficit, including raising rates on the richest Americans—the key sticking point in negotiations. It would defer talks on entitlement cuts until next year, and would give the administration the authority to raise the debt ceiling, preventing Republicans from holding the economy hostage to demand spending cuts, as they did last year.

Republicans are outraged. “This is simply not a serious proposal,” Sen. Roy Blunt of Missouri said. Senate GOP Leader Mitch McConnell said he "burst into laughter" upon seeing the plan.

Progressive Democrats, meanwhile, are cheering the proposal. “Earlier this month, the American people voted for fairness," Rep. Keith Ellison, chair of the Progressive Caucus, said in a statement to "President Obama is fulfilling his campaign promises of standing firm on investing in jobs for working Americans and requiring the wealthiest among us to be responsible citizens."

And even the party’s less liberal members are on board with Obama’s approach. “We had an election, and the president said we needed more revenues from those most able to pay,” Rep. Steny Hoyer, the number 2 Democrat in the House and a liaison to the party’s more conservative members, said on CNN Friday. “Obviously the American public made a judgment.”

Driving the uncompromising Democratic stance is the White House’s knowledge that in most areas of the debt talks, it holds the upper hand. It’s not just that Obama was decisively re-elected after pledging to raise tax rates for the richest Americans, a stance that’s popular with voters. It’s also that the Bush tax cuts are set to expire for everyone at the end of the year if Congress does nothing.

That’s why, as msnbc analyst Ezra Klein notes, Obama appears to have decided that he has the leverage to demand what he wants, rather than offering pre-emptive concessions in an effort to appear reasonable, as he often did in his first term.

“Republicans are frustrated at the new Obama they’re facing: The Obama who refuses to negotiate with himself,” Klein wrote.

The plan puts the ball squarely in Republicans’ court. "Show us your offer," Sen. Barbara Boxer, a California Democrat, told the GOP on msnbc Friday morning.

Separately from the budget proposal, Obama and congressional Democrats are calling on House Republicans to take up a bill extending the Bush tax cuts for the bottom 98% of taxpayers. Republicans have said that no deal can happen without an extension for the richest 2%, though cracks in the GOP resistance have emerged lately.

"The only reason they're not taking it up is they want millionaires and billionaires to get their taxes cut too," Boxer told Thomas Roberts, adding: "They are putting it all on the line for the Koch Brothers and Sheldon Adelson and all these people who earn billions of dollars."