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With both sides on the cusp of a fiscal cliff deal, President Barack Obama vowed Monday to seek additional revenue next year alongside spending cuts. In the process, he also angered several GOP senators who said he demeaned their efforts to reach a deal.
Obama said that a year-end deal to avert tax hikes for the middle class “is within sight, but it’s not done.”
The emerging deal, which sources have pegged at around $600 billion in new revenue, would include permanent extensions of current tax rates on individuals with income up to $400,000 and couples with income up to $450,000. But Obama made clear that he would demand additional revenue as part of any package next year.
Obama has sought a much higher revenue figure — $1.3 trillion — as part of a “grand bargain” in his failed negotiations with Speaker John A. Boehner, R-Ohio.
“My preference would have been to solve all of these problems ... in a grand bargain,” Obama said. But “with this Congress, that was obviously a little too much to hope for.”
The president said lawmakers will still have more work to do next year, including dealing with longer-term deficit reduction and growth, including investments in education and infrastructure, as well as actions that slow the growing cost of Medicare.
“Revenues have to be part of the equation in turning off the sequester, as well as spending cuts,” Obama said.
As far as the deal itself, the president said it would include items he has advocated, including an extension of stimulus tax breaks for tuition and families and tax breaks for wind power.
Immediate reaction from Republicans to the president’s demand for even more revenue, as well as his shots at Congress, was sharp.
Sen. Bob Corker, R-Tenn., took to the Senate floor to say Obama might have alienated Republicans who were tentatively ready to support the current cliff deal, which would push decisions on the sequester and other budget issues to the new year. “I think he’s lost numbers of votes with what he did. He didn’t lose mine, I’m not like that,” Corker said.
Sen. John McCain, R-Ariz., said the president’s remarks were a “cheerleading, ridiculing of Republicans exercise.”
He added, “I have to wonder, and I think the American people have to wonder, whether the president really wants this issue resolved or is it to his short-term political benefit for us to go over the cliff.”
McCain also noted that he believes the president’s statement “clearly will antagonize members of the House.”
But Senate Minority Leader Mitch McConnell, R-Ky., focused instead on getting a deal he said was in hand on the tax side of the cliff. He said lawmakers should move ahead and set aside the sequester and other issues for another day.
And while Obama’s comments caught Republicans by surprise, at least substantively they were largely consistent with previous statements he has made about his continued desire to put together a large, balanced deal to reduce the deficit, even if it has to be done in separate pieces.
In talks with Boehner, Obama had sought a tax increase of $1.3 trillion alongside about $900 billion in spending cuts — not counting interest savings. Boehner was open to a deal that raised taxes by $1 trillion and cut spending by $1 trillion.
In the emerging stopgap deal crafted by Senate leaders, tax rate increases would raise about half the amount of revenue Obama had originally wanted. However, the agreement is constructed in a way that potentially hundreds of billions of dollars in additional revenue could be raised in the future by other means such as limiting the value of tax breaks for people in the higher tax brackets.
However, the structure of the deal, with a permanent extension of tax rates, could be a big barrier to getting another bite at the tax apple next year. That’s because any such hikes would almost assuredly be an explicit violation of Grover Norquist’s anti-tax pledge. The emerging deal, and the grand bargain sought earlier by Obama, would score as a tax cut of several trillion dollars relative to current law. That won’t be the case once Obama signs a permanent extension.
Emily Holden and Sam Goldfarb contributed to this report.