-Won’t Be Able To Come Up With Comprehensive Tax Reform This Yr; Want Down
Payment

WASHINGTON (MNI) – President Barack Obama Tuesday made clear he will not
agree to any deal intended to avert the looming “fiscal cliff” if it does not
include higher tax rates on yearly earnings above $250,000.

“We have the potential of getting a deal done,” Obama said during an
interview on Bloomberg TV, but he stressed again that it will require a balanced
approach to deficit reduction.

“If we are going to raise revenues that are sufficient to balance with the
very tough cuts that we’ve already made – and the further reforms in
entitlements that I’m prepared to make – we are going to have to see the rates
on the top 2% go up,” Obama said, warning “we are not going to be able to get a
deal without it.”

In a letter to the president Monday, House Speaker John Boehner sent a
counteroffer to the White House to break the stalemate in fiscal cliff
negotiations, which calls for $1.4 trillion in spending cuts and $800 billion in
additional revenue through tax reform.

The spending savings include $600 billion from health care entitlements,
$300 billion from other entitlements, $200 billion by using the chained CPI for
indexing benefit programs and $300 billion in additional discretionary savings.

However, Obama said “the Speaker’s proposal right now is still out of
balance … when you look at the math, it doesn’t work.”

Obama declared his preparedness to work with lawmakers to tackle excessive
healthcare costs in the federal system. “There’s probably more cuts that we can
squeeze out,” he said.

At the same time, he remains determined to secure higher tax rates on the
wealthiest Americans as part of any package.

“What I’m not going to do is to agree to a plan in which we have some
revenue that is vague, and potentially comes out of the pocket of middle class
families, in exchange for some very specific and tough entitlement cuts,” he
added. “That’s not the kind of balanced plan that I think would be good for
growth, good for the economy.”

Obama said neither partisanship nor stubbornness is behind his focus on
allowing the Bush-era tax cuts for earnings above $250,000 to expire, but rather
the reality of the situation.

Revenue increases of between $800 billion to $1 trillion cannot be achieved
simply by closing tax loopholes, he argued, and in reality would only raise
between $300 billion to $400 billion.

“We are not going to simply cut our way to prosperity, or cut our way out
of this deficit problem we have,” he said. “We are going to need more revenues.”

A plan that combines higher taxes on the very rich with tax and entitlement
reform would result in a $4 trillion deficit reduction package that helps,
rather hurt, the economy, he said. “I’m prepared to make some decisions on some
of these issues.”

Obama acknowledged that there is not enough time left in the year for both
sides to agree on a comprehensive entitlement or tax reform package, but said he
wants to put “a down payment,” now and then aim to craft a broader package by
latter half of 2013.

The president noted that despite encouraging signs been seen in the
economy, a hit to the wallets of middle class families could have huge
reverberations across the country.

Business leaders, he said, are ready to invest and hire but want more
certainty.

The American economy “is poised to take take off,” Obama said, despite
weaknesses in Asia and Europe. “Let’s make sure we don’t have a self-inflicted
wound because there are a lot of silly games played up on Capitol Hill.”

–MNI Washington Bureau; tel: +1 202-371-2121; email: besene@mni-news.com

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