President Barack Obama on Friday said only a balanced approach of raising revenue through tax increases on the wealthy and cutting corporate tax breaks as well as reducing budgetary spending can resolve the federal deficit and debt stalemate.
“We are obviously running out of time” to resolve the issues before a looming Aug. 2 deadline, when the U.S. government risks not having enough money to pay Treasury security holders and other federal bills, Mr. Obama said at a White House news conference.
The president said he isn't meeting with congressional leaders on Friday.
If the debt issue isn't resolved, “it could have a whole set of adverse consequences,” Mr. Obama said. “We could end up with a situation, for example, where interest rates rise for everybody all throughout the country, effectively a tax increase on everybody.”
Mr. Obama called for a deal that would resolve the federal debt and deficit for years.
“We have a chance to stabilize America's finances for a decade, for 15 years, or 20 years, if we are willing to seize the moment,” he said, adding later in the news conference, “we can … fix this thing probably for a decade or more … that I think would be good for the overall business climate.”
“Here's the good news,” Mr. Obama said. “It turns out we don't have to do anything radical to solve this problem … We're not Greece. We're not Portugal.”
Mr. Obama said the “fallback position” of raising the debt ceiling without any resolution on reducing the deficit and debt is “the least attractive option,” because the issue would “continue to plague us.”
Mr. Obama called for rolling back tax cuts on the wealthy and cutting tax breaks for companies that aren't creating jobs, while also cutting defense and health-care spending. He said he would consider cutting corporate jet and oil company tax breaks.
At the same time, Mr. Obama said extending both the Social Security payroll tax cut and unemployment insurance for another year would help the economy.
He said he would not consider any radical restructuring of Social Security or “voucherizing” Medicare, but would consider structural changes, such as means testing so the wealthy pay more. He said he would not get into specifics when asked whether he would consider raising the eligibility age for the programs. He said he would want to “make sure current beneficiaries as much as possible are not affected.”
“We are willing to look at all those approaches,” he said.
Mr. Obama said “making some modest modifications in (Social Security and Medicare) can save you trillions of dollars.”
Overall, Mr. Obama blamed members of Congress who have been inflexible on compromising to achieve a balanced approach of including tax increases along with spending cuts to come to a resolution.
Mr. Obama said he opposed proposing a balanced budget amendment.
“We don't need a constitutional amendment to do our jobs … to make sure government is living within its means and making responsible choices.” Mr. Obama said.
House Speaker John Boehner, R-Ohio, said Fridaythat for the president's debt ceiling increase to pass the House of Representatives, “there can be no tax hikes because tax hikes destroy jobs,” according to a statement from his office. He said in the statement, “we need real spending cuts and real spending cuts that will exceed the amount of increase in the debt limit; and we need real reforms to restrain the growth of spending in future years, like spending caps and a balanced budget amendment.”