Obama: Deficit Deal Must Increase Taxes for the Wealthy

Washington – President Obama pressured Republicans on Wednesday to accept higher taxes as part of any plan to pare down the federal deficit, bluntly telling lawmakers that they “need to do their job” and strike a deal before the United States risks defaulting on its debt.

Declaring that an agreement is not possible without painful steps on both sides, Mr. Obama said that his party had already accepted the need for substantial spending cuts in programs it had long championed, and that Republicans must agree to end tax breaks for oil and gas companies, hedge funds and other corporate interests.

In a 67-minute news conference, Mr. Obama cast the budget battle as a tug of war between the interests of the rich — like owners of corporate jets, who he said get generous tax breaks — and those of the middle class, the elderly and children.

Directly challenging Republican leaders, Mr. Obama said, “Everybody else has been willing to move off their maximalist position — they need to do the same.”

At the same time, Mr. Obama, under assault frfom Republicans on the campaign trail for an unemployment rate that remains above 9 percent, asked voters to understand that the economic recovery would take time but said that Washington, even in its current financial straits, could still do more to help. He expressed support for extending a reduction in payroll taxes for an extra year, providing loans for road and bridge-building and approving trade pacts that could help spur exports.

While the president expressed hope for a budget deal before the government’s borrowing authority expires in early August, he scolded Republican lawmakers for putting off hard decisions until the 11th hour, saying that his daughters did not procrastinate that way with their schoolwork.

“Malia and Sasha generally finish their homework a day ahead of time,” the president said, in a tone of rising exasperation. “They don’t wait until the night before. They’re not pulling all-nighters.”

The House speaker, John A. Boehner, flatly rejected Mr. Obama’s call for new tax revenues, saying the “president’s remarks ignore legislative and economic reality.”

In a toughly worded statement, Mr. Boehner said the House would vote to raise the debt limit, as the White House has demanded, only if the administration agreed to a deal that contained deep spending cuts and no tax increases.

“The American people know tax hikes destroy jobs,” Mr. Boehner said. “They also know Washington has been on a spending binge for many years, and they will only tolerate a debt-limit increase if we stop it.”

Mr. Obama’s news conference, his first extended exchange with reporters since March, also touched on Libya, on which he offered a brisk defense of his decision not to seek Congressional authorization for the NATO-led air campaign, and on same-sex marriage, which he stopped just short of endorsing as a legal right.

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But the president’s combative remarks on the budget commanded most of the attention, signaling that he had fully entered the fray. On Monday, he took over stalled talks led by Vice President Joseph R. Biden Jr., meeting with Senate Republicans and Democrats, and on Wednesday he met with the Democrats.

So far, the president’s involvement seems mainly to have dramatized the gulf between the White House and the Republicans on fiscal priorities.

By all accounts, the round of negotiations steered by Mr. Biden made significant progress in identifying spending cuts and revenue-generating items. But with the Aug. 2 deadline looming for the expiration of the government’s borrowing authority, the partisan maneuvering on both sides has increased.

Senate Republicans have talked about a short-term increase in the debt ceiling, betting that the White House will accept spending cuts, with no tax increases, rather than face two votes on the issue before the 2012 election. Mr. Obama is taking aim at tax policies that benefit the rich as a way to pressure Republicans. Asserting that chief executives and hedge fund managers are paying the lowest tax rates since the 1950s, before he was born, the president, casting the issue in populist terms that some conservatives said veered into class warfare, said they could afford to pay more.

“You’ll still be able to ride on your corporate jet,” Mr. Obama said. “You’ll just have to pay a little more.”

Under Democratic proposals, owners of corporate jets would have to write off the aircrafts’ cost in more years, which would generate an estimated $3 billion for the Treasury over a decade. Hedge funds and private equity investors would pay higher capital gains tax on their earnings. Phasing out tax deductions and credits for oil and gas companies could raise nearly $40 billion, economists said.

Even if all these changes to the tax code were accepted, they would still amount to only a sliver of the $4 trillion in savings that Mr. Obama has said he wants to achieve. But refusing to increase revenues, he asserted, would necessitate cuts in programs that award college scholarships, finance the National Weather Service and medical research, and improve food safety.

“I’ve said to some of the Republican leaders: you go talk to your constituents, the Republican constituents, and ask them, are they willing to compromise their kids’ safety so that some corporate-jet owner continues to get a tax break?” Mr. Obama said. “I’m pretty sure what the answer would be.”

Citing the hours of meetings he and Mr. Biden had held with leaders from both parties, Mr. Obama seemed particularly piqued by Republican criticism that he had failed to show leadership. Noting that the House is in recess this week, and the Senate is scheduled to be gone next week, he said he had been hunkered down in the White House, “doing Afghanistan and Bin Laden and Greek crisis.” If Congress was serious about a deal, he said, it should cancel its breaks.

There were signs on Capitol Hill that his words had struck a nerve. Nine Republican senators announced that they would object to a recess during the Fourth of July week. Late Wednesday it appeared that Democratic leaders would go along and keep the Senate in session next week.

Wary of spooking financial markets, Mr. Obama stopped short of saying that Aug. 2 was a drop-dead date for a deal. But he dismissed those who argue that the government can ignore the debt limit by paying some bills and not others.

“This is the equivalent of me saying, ‘You know what, I will choose to pay my mortgage, but I’m not going to pay my car note,’ ” Mr. Obama said. “Or, ‘I’m going to pay my car note, but not my student loan.’ ”

Jennifer Steinhauer and Carl Hulse contributed reporting.

This article has been revised to reflect the following correction:

Correction: June 30, 2011

An earlier version of this article inaccurately described a Democratic proposal for changing the tax treatment of corporate jets. Under the plan, owners of jets would be required to write off the cost of the jet over a longer period of time, not a shorter one, which would generate extra revenue for the Treasury.