Obama endorses spending, tax targets in budget talks

President Obama repeated on Wednesday his belief that any long-term agreement to cut the national debt must include tax increases as well as spending cuts, suggesting that the threat of incremental tax hikes, built into negotiations if spending exceeds a certain amount, will push Republicans to the bargaining table.

Obama made the remarks at a town-hall meeting on the economy, broadcast Thursday morning on CBS's Early Show.

CBS's Harry Smith asked Obama what his chances were for getting Republicans to go along with any sort of tax increase. The president responded that "what we're going to end up having to do probably is to set some targets and say, you know, those targets have to be hit [and] if not automatically, some cuts and tax increases will start taking place."

Obama suggested tax-increase triggers alongside mandatory spending-cut triggers would likely figure into negotiations on raising the debt ceiling; as of August 2, the government will no longer be able to pay what it owes. On Tuesday, House Speaker John Boehner, R-Ohio, told Wall Street financiers that his party would not vote to increase the debt limit unless the president agrees to significant actual spending cuts, not just triggers.

But the White House and Democrats have begun to argue forcefully that any incremental budget deal must include a mix of revenue raisers, mostly the discontinuation of the Bush-era tax cuts for the wealthiest Americans, along with spending cuts.

Senate Budget Chairman Kent Conrad, D-N.D., unveiled a draft budget that would raise taxes by one dollar for every dollar of spending reduced.

Obama told CBS that if Republicans knew that tripping wires set on spending would also trigger tax increases, "that will give incentive for us to negotiate and figure it out."

Even as he answered questions on everything from Medicare to the stability of government jobs, Obama spent most of his time discussing the state of the economy. The president said that high gas prices and the housing market remain the biggest headwinds on economic growth.

Obama also conceded that business may be over-regulated.

"There are some legitimate complaints about regulations," the president said. "We've got to do more on simplification, reducing paperwork."

But Obama didn't go into what regulations would be simplified or eliminated, saying only that he wanted to reduce the amount of paperwork on loans arranged through the Small Business Administration.

At the same time, though, the president criticized the business community, calling for companies to "step up" and hire workers.

Obama ended the town hall with a hopeful message:

"Just remember," he said, "that we've gone through tougher times than this. We always come out on top."

Katy O'Donnell contributed to this report.