Obama enters 'fiscal cliff' talks calling for $1.6T in tax hikes

Nov. 9, 2012: President Obama speaks about the economy and the deficit in the East Room of the White House. (AP)

President Obama, ahead of his first press conference since winning re-election and a meeting later this week with congressional leaders, staked out his starting point for fiscal cliff negotiations -- $1.6 trillion in tax hikes.

White House Press Secretary Jay Carney made clear that the president is sticking by his original budget plan, which includes $1.6 trillion in new revenue, by raising taxes on households making more than $250,000.

"The president has put forward a very specific plan that will be what he brings to the table when he sits down with congressional leaders," Carney said.

Republicans, though, are adamantly opposed to raising tax rates, despite a willingness to deal on closing loopholes and deductions. Further, while Carney said the president would consider cuts to entitlements and other domestic programs, it's unclear how far he can go without engendering a backlash from Democratic lawmakers. Whether the sides can bridge those gaps is the big question -- if they cannot, the country will dive over the so-called "fiscal cliff," a combination of spending cuts and tax hikes set to take effect in January.

Obama is set to launch negotiations Friday during a meeting with congressional leaders. But before that, he is holding a press conference Wednesday where he will likely reveal more about his terms for the talks. Obama meets the press at 1:30 p.m. ET, for his first full-blown, solo news conference since March 6.

Republicans are unlikely to agree to anywhere near $1.6 trillion in tax rate hikes over the next decade.

"The president says he wants a 'balanced' approach, and that's what we're offering: revenues through tax reform, and entitlement reform. The alternative is adding a small-business tax to the current broken tax code, which will cost jobs," Michael Steel, spokesman for House Speaker John Boehner, said in a statement.

Sen. Mitch McConnell, R-Ky., said Tuesday the party is "ready to find common ground," but "we're also not about to further weaken the economy by raising tax rates and hurting jobs."

"When it comes to the great economic challenges of the moment, saying that you want a balanced approach is not a plan," he said. "The tedious repetition of poll-tested talking points is simply that and the longer the president uses them as a substitute for leadership, the more difficult it will be to solve our many problems."

House Speaker John Boehner has opened the door to finding revenue by closing loopholes and ending deductions. But Treasury Secretary Tim Geithner said Tuesday that "you will find yourself disappointed" if looking to bring in all new revenue by limiting deductions.

Senate Democratic Leader Harry Reid, D-Nev., said, "Americans are tired of division," and urged Republicans to give on the tax-rate issue.

"It is within our power to forge an agreement that will ask the richest of the rich, the most fortunate among us, to pay a little extra to reduce the deficit and secure our economic future," he said.

The stakes of these talks are high.

The non-partisan Congressional Budget Office has looked at the effects of falling over the fiscal cliff and projected that they would send the U.S. economy back into recession and cause already stubbornly high unemployment to spike above 9 percent. The CBO also estimates that the austerity program would reduce the deficit by nearly $700 billion by the end of 2013.

After his early afternoon news conference, Obama was meeting Wednesday with about a dozen business executives. On Tuesday he met with labor leaders and liberal groups, telling them he would stand behind his campaign pledge to make top earners pay more in taxes.

"We're prepared to stand up to make sure there is shared sacrifice here, so the rich actually start paying their fair share and the middle class don't get soaked for that," said AFL-CIO labor union federation President Richard Trumka.

At issue is an annual U.S. budget deficit that now is routinely above $1 trillion and a national debt that has risen to near $16.5 trillion.

Washington politicians have just over seven weeks, including breaks for the Thanksgiving holiday next week and the Christmas holiday season, to avert the year-end fiscal cliff.

That outcome -- barring legislative compromise by Jan. 1 -- is self-imposed punishment for last year's failure by a bitterly divided Congress and White House to deal with the government's spiraling debt and overhaul its unwieldy tax code.

The Associated Press contributed to this report.