Politics
              President Barack Obama gestures as speaks in the James Brady Press Briefing Room at the White House in Washington, Tuesday, Feb. 5, 2013. The president will ask Congress to come up with tens of billions of dollars in short-term spending cuts and tax revenue to put off the automatic across the board cuts that are scheduled to kick in March 1. (AP Photo/Charles Dharapak)
              President Barack Obama gestures as speaks in the James Brady Press Briefing Room at the White House in Washington, Tuesday, Feb. 5, 2013. The president will ask Congress to come up with tens of billions of dollars in short-term spending cuts and tax revenue to put off the automatic across the board cuts that are scheduled to kick in March 1. (AP Photo/Charles Dharapak)   

Obama insists proposed tax hikes are vital to economic recovery

Neil Munro
White House Correspondent

WASHINGTON — President Barack Obama called for a new round of tax increases to offset the looming budget sequester and help close the annual $1 trillion deficit.

The tax increase is needed to keep the economic recovery going, Obama claimed, even though the economy apparently contracted by 0.1 percent during the last three months of 2012.

“While it’s critical for us to cut wasteful spending, we can’t just cut our way to prosperity,” he said a midday appearance in the White House press room.

“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,” he said.

“There’s no reason why we should keep them at a time when we’re trying to cut down on our deficit,” he claimed.

GOP officials quickly slammed Obama’s proposed tax increase.

“The President’s proposal is nothing more than another tax hike to pay for more Washington spending. That is not what America needs,” said a statement from Michigan Republican Rep. Dave Camp, the chairman of the House tax-writing committee.

“Tax reform should be about making the code simpler and fairer for American families and helping employers create more jobs,” he added.

Obama and his spokesman declined to provide a detailed spending plan, or promise a 2014 budget request prior to March 1. (RELATED: Obama proposal comes one day after he missed deadline for submitting 2014 budget request)

That has been the strategy since 2010, when the GOP won a majority in the House. By not offering detailed budget plans, and by delaying budgets, Obama has averted public spending debates in the House and Senate, and forced Republicans to enter closed-door negotiations with the White House.

Those negotiations give Obama an advantage, because they allow him to dominate media coverage of the talks.

The scheduled sequester cuts, amounting to $1.2 trillion over 10 years, are to be imposed equally on defense programs and domestic spending programs. They were approved by Obama and the GOP during the 2011 budget crisis.

In 2013, the request would cut roughly $50 billion from defense programs supported by the GOP, and $50 billion from the domestic programs favored by Democrats.

For several months, Obama has cited that deal as evidence that he is trying to curb the nation’s $1 trillion per year deficit. The annual deficit has ballooned the nation’s debt from $11 trillion in 2009 to $16 trillion in 2013.

But now Obama is expected to describe the agreed-on cuts as deep and indiscriminate, and to say they will cost hundreds of thousands of jobs.

The nation’s unemployment rate ticked up to 7.9 percent in January. Roughly 20 million Americans are either unemployed or underemployed. (RELATED OPINION: The spending sequester will grow the private economy)

Today’s speech marks the opening rounds in yet another fiscal crisis, caused by deep political and ideological gaps between Obama and the GOP majority in the House.

The periodic crises have damaged Obama’s clout, but have also lowered public support for the GOP’s House majority.

Several GOP legislators have said they expect Obama will try to blame the GOP for these crises, in the hope that Democrats can gain a majority of House seats during the midterm 2014 elections.

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