Barack Obama willing to compromise, but not on tax breaks for wealthy

Talking tough over the fiscal cliff showdown, US President Barack Obama has told the opposition Republicans that he was open to compromises to avert a financial crisis but would not budge on the issue of levying higher taxes for the wealthy .

Emboldened by a victory at the hustings, Obama made it clear that the wealthiest Americans would have to pay higher taxes and tax breaks for middle class should stay.

Into his second term, Obama faces the first major challenge of preventing a $600 billion combination of automatic tax increases and spending cuts if an agreement was not reached over the budget and tax solutions by December 31.

"We face a clear deadline that requires us to make some big decision on jobs, taxes, and deficits by the end of the year... As I've said before, I'm open to compromise and I'm open to new ideas," he said at a press conference.

At his first press conference after his re-election, Obama expressed confidence that he and the US Congress will be able to reach an agreement that avoids a so-called "fiscal cliff" on January 1.

"We cannot afford to extend the Bush tax cuts for the wealthy," Obama said referring to the Bush-era tax cuts for wealthiest 2 per cent of Americans which Obama had to agree to last year as a last minute compromise deal on deficit reduction before Christmas.

He also said that tax breaks for middle class families should stay in place.

"Let's also then commit ourselves to the broader package of deficit reduction that includes entitlement changes and it includes potentially tax reform. I want a big deal. I want a comprehensive deal".

In his opening remarks, Obama said he is open to compromise and to listening to new ideas.

"I have been encouraged over the past week to hear Republican after Republican agree on the need for more revenue from the wealthiest Americans as part of our arithmetic if we're going to be serious about reducing the deficit," he said.

Opposing any tax increase to those earning less than $250,000; Obama said one should not hold the middle class hostage while they debate tax cuts for the wealthy.

"We should at least do what we agree on, and that's to keep middle-class taxes low. And I'll bring everyone in to sign it right away so we can give folks some certainty before the holiday season," he said.

"I know that that's what the American people want us to do. That was the very clear message from the election last week," he said.