Obama: 'Nothing Can Be Off-Limits' in Deficit-Reduction Debate

June 29: President Obama gestures during a news conference in the East Room of the White House in Washington. (AP)

With an Aug. 2 deadline looming to raise the nation's $14.3 trillion borrowing limit, President Obama said Saturday that "nothing can be off-limits" in the deficit-reduction debate -- even though Republicans have said tax increases are.

In his weekly radio and Internet address, the president said every tax break and federal program must come under scrutiny as he called on Congress to make a deal.

He also renewed his call for Congress to eliminate some tax breaks for the well-off as part of any agreement. Republicans want deep spending cuts without any tax increases while Obama and Democrats call for what they term a "balanced" approach. That means one that also includes new revenue in the form of higher taxes for some, though Democrats steer clear of using phrases like "tax increases" or "higher taxes."

"Now, it would be nice if we could keep every tax break, but we can't afford them," Obama said. "Because if we choose to keep those tax breaks for millionaires and billionaires, or for hedge fund managers and corporate jet owners, or for oil and gas companies pulling in huge profits without our help -- then we'll have to make even deeper cuts somewhere else."

"Nothing can be off-limits, including spending in the tax code, particularly the loopholes that benefit very few individuals and corporations," the president said.

Lawmakers and the administration are seeking deficit cuts in the range of $2.4 trillion over the coming decade to balance a similar increase in the debt limit -- one that's large enough to keep the government afloat past the November 2012 election. Currently the debt limit is $14.3 trillion, and Treasury Secretary Timothy Geithner says it must be raised by Aug. 2 to avoid defaulting on the government's financial obligations for the first time in the nation's history.

With both sides dug into their positions, it's not clear how compromise will be reached, though the Senate canceled its plans to take a July Fourth recess next week in order to stay in Washington and work on the problem.

Obama expressed confidence a deal could be made and instead of singling out Republicans as the barriers to agreement, he directed his message to Democrats and Republicans alike.

"We've got to cut the deficit, but we can do that while making investments in education, research and technology that actually create jobs," the president said. "We can live within our means while still investing in our future. That's what we have to do. And I'm confident that the Democrats and Republicans in Congress can find a way to give some ground, make some hard choices, and put their shoulders to wheel to get this done."

Republicans used their weekly address to criticize Obama on the economy and renew their opposition to tax increases.

"The president and Democrats in Congress must recognize that their game plan is not working. It's time to acknowledge that more government and higher taxes is not the answer to our problem," said Sen. Dan Coats, R-Ind. "It's time for bold action and a new plan to address our current crisis."

Coats said that it was time for the government to "stop spending money we don't have and to enact policies that will grow our economy and get Americans back to work."

The Associated Press contributed to this report.