Obama: Tax hikes, spending cuts wrong for economy

U.S. President Barack Obama (L) makes remarks on his meeting with Democratic Senators about health care legislation as Senate Majority leader Harry Reid (D-NV) listens in the Roosevelt Room at the White House in Washington December 15, 2009.

WASHINGTON (Reuters) - President Barack Obama said on Wednesday raising taxes or cutting spending would be the "wrong thing to do" next year when the U.S. economy is still fragile and this would be reflected in his budget plan and State of the Union speech.

"What we have to do is identify ways that, mid-term and long-term, we are pulling the deficit down and reducing our debt," Obama said in an interview with ABC News.

Obama is seeking ways to spur jobs growth, which has lagged behind as signs of economic recovery emerge, but remains wary of adding significantly to government debt.

Obama is grappling with a $1.4 trillion federal deficit in fiscal 2009. Republican opponents have accused him of overspending since taking office in January. Obama has countered that he inherited a budget mess from his predecessor, George W. Bush, and now working to clean it up.

"We have a structural deficit," Obama said. "So here's what we're going to have to do. I've been very clear -- and this will be reflected in my budget and my State of the Union address next year -- that trying to either raise taxes or cut spending next year would be the wrong thing to do for an economy that's still coming out of a recession and is still very fragile."

Obama has persisted, said his main deficit-cutting priorities would be dealing with Medicare and Medicaid, reducing non-defense discretionary spending and winding down the war in Iraq.

He also said he was trying to "change a culture" of "earmarks" in government spending where lawmakers push for spending on pet projects in their districts. But he added, "It is not something that is going to happen overnight."

Asked what he would have to do in the next three years to consider his presidency successful, Obama said, "I've got to get, number one, the economy back on track, and I think that we have been successful in averting disaster."

"Economic growth was strong in the third quarter. We think it'll be good in the fourth quarter, as well, but job growth has not caught up. So my number one priority over the next three years is to make sure that we're not only growing the economy in the aggregate, but people are getting hired," Obama said.

Obama has seen his public approval ratings decline from once-lofty levels as high unemployment has persisted.

(Reporting by Matt Spetalnick; Editing by Eric Walsh)