This afternoon, President Obama called for a combination of tax hikes and some budget reforms to avoid the sequester cuts that are scheduled to kick in automatically on March 1 absent congressional action. “We can’t just cut our way to prosperity,” he said, rejecting a deficit-reduction and sequester-avoidance approach limited to spending cuts. He requested a “balanced mix of spending cuts and more tax reform” from Congress, emphasized that proposals he made in discussions with Speaker Boehner during the fiscal-cliff negotiations last year were “still on the table.” Some of these proposals included substantially more revenue than was actually included in the final fiscal-cliff deal, and would have used that revenue in part to postpone sequestration for one year. (Various deals proposed by the president, he explained, also included health-care and entitlement reforms as deficit-reduction measures.)
This morning, Speaker Boehner explained that congressional Democrats and the president have both failed to propose budgets, and that “none of them have a plan to replace the sequester.” He indicated his continued opposition to tax increases, including as a measure to stave off sequestration.
Yet President Obama remained firm in his insistence that the government raise revenues by increasing the tax burden on wealthier Americans, via “tax reform”:
In order to achieve the full $4 trillion that is the stated goal of economists and our elected leaders, these modest reforms in our social-insurance programs have to go hand-in-hand with a process of tax reform so that the wealthiest individuals and corporations can’t take advantage of loopholes and deductions that aren’t available to most Americans.
The president explained that the revenue gained from closing these loopholes would be exclusively for deficit-reduction purposes, and he was not willing to reduce other taxes at the same time, or as he termed it, “turn around and spend that on new tax breaks for the wealthiest, or for corporations.”
He also suggested that “if Congress can’t act immediately on a bigger package” or pass a “full budget” before the sequester hits on March 1, they should buy time for further negotiations with a “smaller package of spending cuts and tax reforms,” which would “delay the economically damaging effects of the sequester for a few more months.”