President Barack Obama said Tuesday that while tax rates must go up for a "fiscal cliff" deal, it may be possible to lower rates at the top end of the scale late next year as part of tax reforms that would close loopholes and limit deductions.
"Let's let those go up," Obama told Bloomberg Television in an interview, referring to tax rates for the wealthiest Americans.
"And then let's set up a process with a time certain, at the end of 2013 or the fall of 2013, where we work on tax reform, we look at what loopholes and deduction both Democrats and Republicans are willing to close, and it's possible that we may be able to lower rates by broadening the base at that point."
The remarks, which reiterated a position that White House officials have expressed privately, is designed to give Republicans an opportunity to lower rates for the rich, but only after they rise at year's end when Bush-era tax cuts expire.
Later, however, White House spokesman Jay Carney left open the possibility that the rate would not have to rise to 39.6 percent, the rate in place during the administration of President Bill Clinton.
The president made his comments a day after Republican House Speaker John Boehner released a counteroffer to Obama's initial proposal to avoid the end-of-year combination of half a trillion dollars in automatic tax hikes and spending cuts.
"We're going to have to have higher rates for the wealthiest," Obama told Bloomberg. "It's just a matter of math."
"We have the potential of getting a deal done," he added.
On Monday, Boehner called for steep spending cuts, but gave no ground on Obama's proposal to raise tax rates on the wealthiest Americans. (Read More: GOP 'Cliff'' Plan: Cut Medicare and Social Security.)
Boehner's plan elicited sharp criticism among conservative Republicans, potentially complicating what are expected to be intense negotiations between Boehner and Obama. Each will need the backing of their respective troops in Congress in order to bargain credibly.
The fiscal cliff refers to steep tax increases and deep automatic spending cuts slated to take effect on New Year's Day. If Congress and Obama do not act to stop them,the economy could be thrown back into recession.
The disagreements among Republicans surfaced as negotiations on a deficit reduction plan designed to supplant and avert the automatic cuts and tax hikes got more serious, with both parties having presented opening offers.
Sen. Jim DeMint, a South Carolinian with a following among small-government conservatives, lashed out Boehner's offer.
"Speaker Boehner's $800 billion tax hike will destroy American jobs and allow politicians in Washington to spend even more," DeMint said in a statement.
In the House, two first-term Republican Tea Party stalwarts — Tim Huelskamp of Kansas and Justin Amash of Michigan — were removed by party leadership from the powerful budget committee in what Huelskamp called "a vindictive move."
The Republican leadership offered no immediate explanation for the unusual action, but Boehner has had problems bringing in line the large Tea Party wing in the House. Elected to Congress in force in 2010, they regard the speaker as too much of a compromiser and tied his hands during talks in 2011 on raising the debt ceiling.
"The GOP leadership might think they have silenced conservatives, but removing me and others from key committees only confirms our conservative convictions," said Huelskamp.
Washington interest groups are now fully consumed by the cliff, and some are in a bit of a panic about what the talks might bring.