Obama in College Park: Tax increase on rich necessary

COLLEGE PARK, Md. (AP) - Less than two weeks away from an unprecedented government default, President Barack Obama sought Friday to pressure House Republicans to come around to a deal that he insisted must include new taxes as well as unpalatable spending cuts.

At the same time, even with no clear end in sight to negotiations that have dragged on for weeks, the president asserted that the U.S. has never defaulted on its debt and won't do so now.

"The United States of America doesn't run out without paying the tab. We pay our bills. We meet our obligations," Obama said at a town hall meeting at the University of Maryland, College Park.

Asserting that the American people as well as many in Congress are on board with his approach of mixing higher taxes for some with steep spending cuts, the president said, "The only people we have left to convince are some folks in the House of Representatives and we're going to keep working on that."

House conservatives have resisted higher tax revenues and some Democrats have come to fear Obama would give ground and agree to a deal with spending alone. Obama made clear that taxes needed to be in the mix.

"If we only did it with cuts, if we did not get any revenue to help close this gap between how much money's coming in and how much money's going out, then a lot of ordinary people would be hurt and the country as a whole would be hurt and that doesn't make any sense. It's not fair," Obama said.

"This isn't about punishing wealth, it's about asking people who've benefited the most over the last decade to share in the sacrifice," the president said.

"This isn't just some wild-eyed socialist position, it's the position being taken by people of both parties and no party," he said.

Friday's town hall meeting was Obama's first foray this month outside what he calls the White House "bubble," where he's been occupied with virtual daily negotiations with congressional leaders on getting a deal to raise the debt limit. The deadline is Aug. 2, and if an agreement isn't reached by then, administration officials and outside experts warn of financial chaos that could reverberate around the globe and affect the fragile economic recovery at home.

Obama sought to add urgency to that deadline, telling viewers how it would impact them, in higher interest rates and difficulties for businesses that could keep them from investing and hiring. Shortly before he spoke the Senate voted down a House-passed plan to enact steep spending cuts and require a balanced budget constitutional amendment as the price for raising the debt limit.

In behind-the-scenes talks Obama continues to reach for a "grand bargain" of up to $4 trillion over a decade, including some $3 trillion in cuts and $1 trillion in new taxes. Even though he's working with House Speaker John Boehner, R-Ohio, on the approach, it's not clear whether it will find enough support in Congress to pass - or at least to pass in time.

In response to a question from a member of the university audience, Obama made a lengthy pitch Friday for the virtues of compromise - something that has seemed hard to find in the debt limit debate.

"This notion that somehow if you're responsible and you compromise that somehow you're giving up your convictions, that's absolutely not true," Obama said, blaming gerrymandered congressional districts among other factors for the problem, saying many lawmakers feel that making political accommodations with the other side in Washington can end up causing them to be challenged in their own parties for re-election at home.

He also dismissed a strategy promoted by some liberals as a possible solution, the notion that the constitution might give the president the ability to proceed unilaterally in raising the debt limit without congressional approval.

"I have talked to my lawyers, they are not persuaded that that is a winning argument," he said.

The 14th Amendment states that the "validity of the public debt... shall not be questioned," language that some scholars claim gives the president the authority to increase borrowing authority on his own

Obama's answer Friday suggested for the first time that he had actually considered the issue. Two weeks ago, Obama said, "I don't think we should even get to the constitutional issue."