Obama stresses need for more tax revenue; Senate rejects House debt plan

View Photo Gallery — Debt-limit debate continues as clock ticks down: Negotiations have appeared to whipsaw from a fallback plan that would raise the debt ceiling but do little to control future borrowing to an ambitious, but complicated, bipartisan strategy for raising taxes and cutting cherished health and retirement programs.

President Obama insisted Friday that any broad deficit-reduction plan must include new tax revenue in addition to large spending cuts, and the Senate rejected a bill from the Republican-controlled House that would have required a balanced budget amendment and massive cuts, but no tax hikes.

The Senate also set aside immediate plans to consider a bipartisan measure to raise the federal debt limit and avert a government default, leaving it to the House to approve such a plan first. The moves were made in the hope that the House can pass the so-called “grand bargain” to reduce the deficit and raise the debt ceiling next week.

Speaking at a town hall meeting at the University of Maryland in College Park, Obama told a largely supportive audience, “We can’t just close our deficit with spending cuts alone.” That would mean senior citizens would have to “pay a lot more for Medicare,” students would have trouble getting education loans, job training programs would be trimmed and there were be “devastating cuts” in medical and clean-energy research, he said.

“If we only did it with cuts, if we did not get any revenue to help close this gap . . . then a lot of ordinary people would be hurt, and the country as a whole would be hurt,” Obama said. “And that doesn’t make any sense. It’s not fair. And that’s why I’ve said, if we’re going to reduce our deficit, then the wealthiest Americans and the biggest corporations should do their part as well.”

Obama spoke a day after his talks with House Speaker John A. Boehner on a far-reaching deficit-reduction plan ran into a revolt from Democrats furious that the accord appeared to include no immediate provision to raise taxes.

With 12 days left until the Treasury begins to run short of cash, Obama and Boehner (R-Ohio) were still pursuing the most ambitious plan to restrain the national debt in at least 20 years. Talks focused on sharp cuts in agency spending and politically painful changes to cherished health and retirement programs aimed at saving roughly $3 trillion over the next decade.

But in his remarks Friday, Obama appeared to stick to his insistence that any large deficit-reduction deal include increased tax revenue. He provided no details of his talks with Boehner and made no mention of Democratic lawmakers’ objections to what they were told was a plan to postpone rewriting the tax code.

“This idea of balance, this idea of shared sacrifice, of a deficit plan that includes tough spending cuts but also includes tax reform that raises more revenue, this isn’t just my position,” he said. “This isn’t just a Democratic position. This isn’t some wild-eyed socialist position.” Rather, it argued, it is a position taken in the past by presidents from both parties who have signed major deficit-reduction deals.

“So we can pass a balanced plan like this,” Obama said. “The only people we have left to convince are some folks in the House of Representatives. We’re going to keep working on that.”

Obama also spoke forcefully about the need to raise the $14.3 trillion debt ceiling in the coming days.

Obama stresses need for more tax revenue; Senate rejects House debt plan