Barack Obama ready to make 'big commitments' to avert fiscal cliff However he added that he was "open to compromise" and was "ready to make big commitments" on entitlements - the welfare spending that Republicans say has run out of control and must provide a core component of any deficit reduction plan. Failure to reach agreement would trigger tax increases and spending cuts worth $600bn, risking a severe downturn in America's already sluggish economic recovery, while leaving the American public further disillusioned about the capacity of Washington to do business. Mr Obama warned that failure to reach an agreement before the New Year would hit high-street consumer confidence as families set about their Christmas shopping and risked stalling the country's nascent economic recovery. Before the election, Republicans had ruled out any tax raises - including on the top 2 per cent of earners with over $250,000 a year - but following last week's defeat have hinted that they are open to the wealthy being asked to pay more. While ruling out headline tax-rate increases, John Boehner, the Republican speaker of the House of Representatives, has hinted that he accepts that additional revenues worth $800bn over 10 years through closing loopholes in America's byzantine tax code. Glenn Hubbard, a key economic advised to Mitt Romney, joined other Republicans in suggesting that it was no longer politically viable to rule out higher effective taxes on the rich, but also warned Democrats against believe that America's finances could be healed simply by taxing the rich. "The first step is to raise average (not marginal) tax rates on upper-income taxpayers," he wrote in The Financial Times, "Revenues should come first from these individuals." However senior Obama administration figures, including the treasury secretary Timothy Geithner, have already appeared to rule out raising revenues only by capping deductions on items such as mortgage interest for the very rich. I don't see how you do this without higher rates. I don't think there's any feasible, realistic way to do it," Mr Geithner said at a conference in Washington this week. When you take a cold, hard look at the amount of resources you can raise from that top 2 percent of Americans through limiting deductions, you will find yourself disappointed relative to the magnitude of the revenue increases that we need. Mr Obama, who has promised to go 'on the road' to persuade voters of his plan to reduce borrowing by $4 trillion over ten years, has also been making his case this week to union leaders and progressive groups, as well as business leaders. On Tuesday Mr Obama assured union leaders that he would strike a hard bargain with Republicans, assuring them he would not resile from his pledge to raise $1.6 trillion in revenues, according to Jay Carney, the White House press spokesman. In separate meeting on Wednesday, Mr Obama, who was often accused of being anti-business in his first term, also met with corporate leaders from a raft of major US blue chip companies including General Electric, Ford, American Express, IBM, PepsiCo, Honeywell and Dow Chemical. Last week the Business Roundtable, which represents companies including Coca-Cola, Dell and Ford, urged politicians to "start making decisions." Companies have already slowed investment because of the lack of clarity over future tax rates and spending cuts, official data showed last month.