Obama Says Fiscal Cliff Deal Should Include Tax Increase

President Barack Obama said that he still has hope that they can avoid the fiscal cliff within the deadline but he maintained that no deal will be done unless Republicans are willing to increase the income tax rates for the top earners. He repeated his demand to increase the rates on the top 2 percent during his first televised interview since winning last November 6.

President Obama said that the Republican opposition to any increase in tax rates has prevented any progress in the discussions. He said that he has spoken with House Speaker John Boehner more often. He added that the speaker’s proposal is out of balance. The GOP unveiled its plan to extend all income tax cuts and make changes to Social Security and Medicare.

The plan is opposite with that of the White House that calls for $1.6 trillion in new tax revenue from higher rates on rich Americans and unspecified savings from Medicare. The president also wants more economic stimulus spending.

Both sides of the table dismissed each other’s proposal. It looked like the gridlock will continue as the deadline nears. One of the issues that need to be resolved is the income tax rates for the top 2 percent of Americans. President Obama wants to increase the taxes by the end of the year while Republicans oppose any raise of rates on the rich.

If President Obama and the Republicans can’t reach a compromise, automatic tax hikes and large spending cuts will take effect at the start of next year. This could send the nation’s economy into another recession.

The fiscal cliff is the result of the failure by Congress and the White House to take the required steps to decrease the federal debt and deficits. President Obama said that he could be flexible with the taxes and entitlement reforms but not this time. He said that the tax code should be revamped next year to remove all the loopholes and deductions that both parties are willing to close.