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Obama Is Pressed on Petraeus and Holds Line on Taxes Obama Is Pressed on Petraeus and Holds Line on Taxes
(about 2 hours later)
WASHINGTON — President Obama on Wednesday declared that he would not extend tax cuts at upper income levels but that Congress should quickly do so for the middle class, and he praised David H. Petraeus’s record while saying that national security had not been compromised during the intelligence official’s affair with his biographer. WASHINGTON — President Obama, riding the winds of re-election, signaled Wednesday that he was prepared to battle with Republicans over budget negotiations and his national security team’s handling of the deadly attack on an American mission in Libya.
At a news conference, Mr. Obama emphasized the need for a deal to settle budget issues before the end of the year, but he was also pressed on the scandal that forced the resignation of Mr. Petraeus as the director of the Central Intelligence Agency. Displaying a mix of resolve and restraint, Mr. Obama flatly rejected any budget deal that did not raise tax rates on income above $250,000 a year, even if it meant driving the economy into a recession. But he did not rule out a compromise that could leave the top tax rates lower than their levels during the Clinton administration, presumably combined with a restriction on some tax breaks for top earners.
Maintaining that “people are innocent until proven guilty,” the president said that while he did not want to “meddle” in the investigation, he hoped that the scandal that upended the career of Mr. Petraeus “ends up being a single side note on what ends up being an extraordinary career.” For a president fresh off a hard-fought victory, Mr. Obama projected little of the triumphalism of other newly re-elected leaders like Ronald Reagan and George W. Bush, who boasted in 2004 that he had amassed political capital and planned “to spend it.”
His remarks at the news conference were the first from Mr. Obama on the scandal. Mr. Obama instead cloaked his tough stance in the language of compromise, saying he was “familiar with all the literature about presidential overreach in second terms,” and that his re-election was not a mandate to ram his proposals through Congress without any concessions.
“My main hope right now is that he and his family are able to move on,” Mr. Obama told reporters. “General Petraeus has had an extraordinary career.” In his first formal news conference in eight months, which was meant to position Mr. Obama for the coming fiscal battles but ended up including a C.I.A. scandal and a vitriolic fight over who is to blame for the attack on the American diplomatic mission in Benghazi, Libya, the president saved his most fiery words to defend his ambassador to the United Nations, Susan E. Rice. Ms. Rice, a candidate for secretary of state, has come under withering attack from Senator John McCain and other Republicans for suggesting that the siege in Benghazi that killed four Americans was a spontaneous protest rather than a premeditated terrorist attack.
The president used his first official news conference since June to urge haste in budget negotiations meant to avert abrupt shifts in taxes and spending at the end of the year, and he called on Congress to extend middle-class tax cuts immediately, before lawmakers begin working on a complete deficit agreement. “For them to go after the U.N. ambassador, who had nothing to do with Benghazi and was simply making a presentation based on the intelligence that she had received, and to besmirch her reputation, is outrageous,” Mr. Obama said, his eyes flashing with anger.
He insisted that he would not agree to a similar extension of Bush-era tax rates on the highest levels of income. Describing Ms. Rice’s conduct as “exemplary,” he warned that her critics have “got a problem with me.” Almost daring them to a confirmation battle, he vowed to nominate Ms. Rice if he determined that she was the right person for secretary of state.
“We should not hold the middle class hostage while we debate tax cuts on the wealthy,” the president declared in an opening statement. Appearing before reporters in the East Room of the White House, he said that “right now, our economy is still recovering from a very deep and damaging crisis, so our top priority has to be jobs and job creation.” Mr. Obama’s remarks drew an equally angry response from Senators McCain and Lindsey Graham. In a statement issued after the news conference, Mr. Graham reiterated that he would oppose “anyone who is up to their eyeballs in the Benghazi debacle.”
He reiterated his pledge to push for increasing taxes on the wealthy, but added that an extension of the middle-class tax cuts must go into effect at once. By contrast, the president struck an almost elegiac tone in discussing the sex scandal that forced the resignation of David H. Petraeus as director of the Central Intelligence Agency. Mr. Petraeus, he said, told him that he did not meet his own standards for holding the job.
He described two choices on taxes for the lame-duck Congress: either to allow taxes to rise across the board at all income levels, or to pass a bill extending tax cuts for all but those in the highest tax brackets. But, Mr. Obama added, “We are safer because of the work Dave Petraeus has done,” voicing hope that the scandal would end up as a “single side note on what has otherwise been an extraordinary career.”
He said that extending tax cuts at lower income levels would provide a stimulus and help avert a recession that some economists have warned would accompany the steep spending cuts and tax increases that have come to be called the “fiscal cliff.” Mr. Obama was cautious in responding to questions about whether he should have been told earlier about the investigation into the relationship between Mr. Petraeus and his biographer, Paula Broadwell, with the president saying that he would leave it to the F.B.I. to explain its “protocols.” But while he offered no criticism of the investigation, he appeared to leave himself room to do so in the future, should new information emerge.
“Half of the danger to our economy is removed by that single step,” he said. “I am withholding judgment with respect to how the entire process surrounding General Petraeus came up,” he said.
“We cannot afford to extend the Bush tax cuts for the wealthy,” he insisted. In laying out his position on the budget, Mr. Obama emphasized that debate over taxes had been central to the election he just won and reprised many of the themes he had struck on the campaign trail. The president urged Republicans to go along with his proposal to extend the Bush-era tax cuts on all personal income up to $250,000 a year, noting that people who made more than that amount would also benefit from such an extension.
Mr. Obama and the four top Congressional leaders are set to meet Friday in the first round of what are likely to be grueling negotiations aimed at averting the year-end fiscal pileup of expiring tax breaks and across-the-board spending cuts. “But when it comes to the top 2 percent, what I’m not going to do is extend further a tax cut for folks who don’t need it, which would cost close to a trillion dollars,” Mr. Obama said.
Speaker John A. Boehner has been careful in his public comments so far to say that Republicans are willing to consider additional federal revenue raised through changes in the tax code and closing loopholes. The president has not so far insisted that tax rates will have to be raised, but analysts and Congressional Democrats say the revenue needed to make a dent in the deficit cannot be generated solely through closing loopholes. While he insisted that the tax cuts for income above $250,000 must expire, Mr. Obama did not stipulate that the top rate would revert to 39.6 percent, as it was in the Clinton administration. Mr. Bush signed a bill a decade ago reducing it to 35 percent, where it has remained.
In advance of the news conference, the speaker’s office emphasized that House Republicans earlier this year passed legislation that would extend the Bush-era income tax cuts and head off cuts in military spending. But those bills were objectionable to Democrats and got not traction in the Democratic-controlled Senate, which for its part has already passed a bill extending tax cuts for the middle class. Mr. Obama’s stance appeared to leave room for the White House and Republicans to negotiate a tax rate somewhere in between and then raise additional revenue by restricting tax deductions and credits on high incomes. “I don’t expect Republicans simply to adopt my budget,” he said. “That’s not realistic. So I recognize that we’re going to have to compromise.”
In a sign of the rapidly emerging clout of the Latino community, the third reporter the president called on was from the Spanish-language network Telemundo, and she, as he expected, asked him about immigration. That gave him the opportunity to call for lawmakers to begin work on immigration legislation immediately after his inauguration. Still, Mr. Obama said he could envision a situation in which there was no agreement and all the tax cuts expired. Such an outcome would be a “rude shock” for middle-class people, he said, and could set off a recession.
He said that he believed that the increase in Latino turnout at the polls should “cause some reflection on the part of some Republicans,” adding that he wanted to see the Dream Act made into law to assist people who grew up in this country in becoming citizens. Immigration reform, he said, “has not historically been a partisan issue.” “It would be a bad thing,” he said. “It is not necessary.”
Mr. Obama said he had not yet reached out to his defeated Republican challenger, Mitt Romney, but, when asked, he said he was looking forward to getting ideas from Mr. Romney and looking for ways to work together. He specifically mentioned Mr. Romney’s work on the Salt Lake City Olympics as an example of his managements skills. By suggesting he was willing to accept failed negotiations, Mr. Obama was in part trying to give himself more leverage than in 2010, when fears about the economy and its impact on his political standing caused him to reverse course and accept an extension of all the Bush tax cuts in exchange for additional stimulus. This time, however, the economy is somewhat stronger, Mr. Obama has no more elections in front of him — as he pointed out on Wednesday — and the package of budget changes set to take effect on Jan. 1 includes both tax increases and military cuts that Republicans generally oppose.
Looking far more relaxed than he did during much of the campaign, Mr. Obama said he hoped to be a better president in the second term than he was in the first. “I don’t have to run for re-election again,” he said, seeming relieved. Speaker John A. Boehner, the effective leader of the Republican Party, said Republicans were not ready to accept Mr. Obama’s proposal because it would “hurt our economy and make job creation more difficult.” But he added that there was a “spirit of cooperation” that had infused Washington and that gave him optimism that some sort of deal would eventually come to pass.
He then launched into a spirited defense of his United Nations ambassador, Susan E. Rice, saying he was “outraged” by repeated questions about Ms. Rice’s appearance on Sunday news programs after the attack on the American diplomatic compound in Benghazi, Libya, which led to the deaths of four Americans. Republicans say they will find a way to raise enough money to reduce the deficit without lifting the top rates. Back-of-the-envelope math suggests that eliminating all tax breaks for the top 2 percent of households would raise about $2 trillion over 10 years, more than the $1.6 trillion that the White House demands, as part of a $3 trillion deficit-reduction package over 10 years. But having all of the additional tax revenue come from the restriction of tax breaks would require getting rid of virtually every such provision, like the home-mortgage deduction, in the tax code on top incomes.
“If Senator McCain and Senator Graham want to go after somebody, they should go after me,” Mr. Obama said, referring to lawmakers who have said they would try to block him if he tried to make her secretary of state. He said he had not decided who will replace Hillary Rodham Clinton when she leaves that job, but said he would not let the questions about Ms. Rice stop him from appointing her if he decided to choose her. “The math tends not to work,” Mr. Obama said.
On efforts to rein in Iran’s nuclear ambitions, the president said he believed that “there is still a window of time to resolve this diplomatically,” adding that there should be a way for the Iranian government to enjoy peaceful nuclear power. Allowing tax rates to rise on the wealthy — to the Clinton-era levels, or a few percentage points below them — puts much more money on the table and would allow more moderate changes to deductions, Democrats argue.
“I will try to make a push in the coming months to see if we can open up a dialogue with not just us, but the international community,” Mr. Obama said. He declined to go into details about negotiations, but repeated his denial of an article last month in The New York Times that said the United States and Iran had reached an agreement in principle to hold one-on-one talks over Tehran’s nuclear program. Looking beyond the immediate fiscal challenges, Mr. Obama expressed optimism about one major goal — immigration legislation — and caution about another, climate change.
On Syria and its president, Bashar al-Assad, Mr. Obama proclaimed himself “one of the first leaders around the world who said that Assad had to go.” But he did not take the opportunity to follow the lead of France, which declared on Tuesday that it was recognizing the newly formed Syrian rebel coalition and would consider arming the group. The president said he intended to pursue comprehensive immigration legislation, and noted that the election had prompted reflection among Republicans about their opposition to such an effort. Even as he criticized Mr. McCain on Benghazi, he cited his support for an overhaul of immigration law as an indication that it could pass.
“One of the things we have to be on guard about, particularly when we start talking about arming the opposition, is that we’re not putting arms in the hands of people who would do Americans harm,” Mr. Obama said, “or do Israelis harm.” On climate change, Mr. Obama played down expectations for any major initiative. He spoke of holding a conversation with scientists and engineers about fresh ideas, but said more ambitious legislation would come only after the economy strengthened.
Then he declared his news conference at an end and refused to take a last shouted question from a reporter, saying it would be “a terrible precedent” to set. “We’re still trying to debate whether we can just make sure that middle-class families don’t get a tax hike,” he said. “That should be easy. This one’s hard.”
After the news conference, Mr. Obama was scheduled to meet with about a dozen business chief executives at the White House as part of his effort to get both business and labor to support raising around $1.6 trillion in new revenues over 10 years, largely through taxes on business and the wealthy. Jay Carney, the White House press secretary, has said that increased revenue, when combined with $1.1 trillion in spending cuts that have already been signed into law and additional savings from Medicare and Medicaid, would reduce the deficit by $4 trillion over 10 years.

Annie Lowrey contributed reporting.

The last time the president stepped on a podium for an official news conference was in June, at the Group of 20 economic summit meeting in Los Cabos, Mexico. And even then, he took only three questions, leaving the press assembled before him grumbling that even Vladimir V. Putin, the Russian president, had answered more queries from journalists at the meeting.