President Barack Obama rejected a Republican proposal to resolve a looming fiscal crisis on Tuesday as "still out of balance" and insisted any deal must include a rise in income tax rates on the wealthiest Americans.
Obama told Bloomberg Television that the Republicans' reliance on eliminating tax deductions instead of letting taxes rise on Americans making more than $250,000 a year would not raise enough money to fund the government.
House of Representatives Speaker John Boehner of Ohio, the top Republican in Congress, laid out a proposal on Monday that called for spending cuts but did not give any ground on Obama's call for an increase in tax rates for the top 2 percent of U.S. earners.
"Unfortunately, the Speaker's proposal right now is still out of balance. You know, he talks, for example, about $800 billion worth of revenues, but he says he's going to do that by lowering rates. And when you look at the math, it doesn't work," Obama said.
Obama, who won re-election last month, said it was important for Republicans to acknowledge that tax rates had to rise for top earners to raise revenue sufficient to balance spending cuts.
"We're going to have to see the rates on the top 2 percent go up. And we're not going to be able to get a deal without it," he said.
Obama said on Tuesday that while tax rates must go up for a "fiscal cliff" deal, it may be possible to lower rates at the top end of the scale late next year as part of tax reforms that would close loopholes and limit deductions.
"Let's let those go up," Obama told Bloomberg in an interview, referring to tax rates for the wealthiest Americans.
"And then let's set up a process with a time certain, at the end of 2013 or the fall of 2013, where we work on tax reform, we look at what loopholes and deductions both Democrats and Republicans are willing to close, and it's possible that we may be able to lower rates by broadening the base at that point."
Obama acknowledged there were more spending cuts that could be made and he pledged to work with Boehner to trim what he called excessive healthcare costs in the budget but that a deal was not possible without raising tax rates on the wealthy.
"There's probably more cuts that we can squeeze out, although we've already made over $1 trillion worth of spending cuts," he said.
Obama said there was not enough time this year to come up with an overhaul of the U.S. tax system and entitlement programs that Republicans want as a condition for an agreement to avoid the so-called fiscal cliff, a combination of tax hikes and spending cuts set to start in 2013 that economists predict will throw the economy into depression.
He said that despite weaknesses in Europe and Asia, he believed the U.S. economy is "poised to take off."
Obama added he is considering bringing a top business executive onto his economic team, but that the Senate confirmation process can be so difficult that some business executives shy away from government service.
Obama says Republican "fiscal cliff" plan out of balance
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Obama says Republican "fiscal cliff" plan out of balance
