UPDATE 1-Obama says Republican 'fiscal cliff' plan out of balance

Tue Dec 4, 2012 4:16pm EST

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WASHINGTON Dec 4 (Reuters) - 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.

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Comments (1)
URNSO wrote:
Sounds like a plan to kick the can down the road.

Wouldn’t it be nice to know how much Obama’s 2% plan would raise compared to cutting loop holes.

Why does he think that it is not possible to trim “excessive health care costs” without raising tax rates on the wealthy. That is like saying that he won’t stop wasting money until they agree to give him more money only by increasing the rates, not just raising more revenue.

In my house we can cut spending before we find more income.

Either the reporter missunderstood Obama or he has no grasp on reality. Maybe Obama is afraid to cut loop holes for big corporations because he feels he owes them for helping with the election. Does he really think that GE will pay a fair share with a increase in thier base rate.

Dec 04, 2012 4:47pm EST  --  Report as abuse
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