WASHINGTON – President Obama on Tuesday rejected a GOP offer for avoiding the so-called fiscal cliff and underscored his refusal to accept any deal that does not increase income tax rates for top earners.
In his first interview since reelection, Obama said the Republican plan offered Monday was “out of balance” and acknowledged that talks between the president and congressional Republicans were hung up on the tax rate dispute.
“We’re going to have to see the rates on the top 2% go up. And we’re not going to be able to get a deal without it,” Obama told Bloomberg Television.
The White House has been holding to this line in the talks, although neither the president nor his aides have said how high an increase is needed. Income tax rates on all taxpayers are set to rise to Clinton-era levels at the end of the year, unless Congress and the White House agree to an alternative proposal.
The Republican proposal would extend all the current tax rates, but aims to find $800 billion in new revenue over a decade for deficit reduction by eliminating tax loopholes and deductions. Obama agreed last year to that figure as a revenue target for tax reform in discussions with House Speaker John A. Boehner (R-Ohio). But he said Tuesday that raising that amount would require lawmakers and the president to eliminate popular tax deductions, such as the deduction for charitable giving.
“It’s not me being stubborn. It’s not me being partisan. It’s just a matter of math,” Obama said. “When you look at how much revenue you can actually raise by closing loopholes and deductions, it’s probably in the range of $300 billion to $400 billion. That’s not enough to come up with a balanced plan that actually reduces the deficit and puts us on the path of long-term stability.”
Republicans on the Hill accused the president of moving the goal posts.
Obama also outlined the two-step process that many in Washington expect the tax deal to take. The president suggested that a deal might agree on short-term goals – a “down payment” of spending cuts in return for a vote to extend the current income tax rates for the middle class – while also setting longer-term targets for entitlement and tax reforms.
“It’s possible that we may be able to lower rates by broadening the base at that point,” he said. “And I’m happy to work with them. In fact, I do believe that we can simplify the tax system, and by closing some loopholes and deductions, and cleaning out some of the underbrush in the – in the tax code, that we can have a fairer, more efficient system.”