President Barack Obama and House Speaker John Boehner signaled Friday a willingness to compromise on tax positions that have led to a budget stalemate, in a bid to defuse partisan tensions before talks next week to avert a year-end fiscal crisis.

Obama said any "fiscal cliff" compromise would have to include higher taxes on wealthier Americans, putting him directly at odds with Republicans hours after Boehner said the GOP wouldn't agree to higher income-tax rates. Former Director of the National Economic Council Keith Hennessey discusses on The News Hub. Photo: Getty Images.

Mr. Obama invited Republican and Democratic congressional leaders to the White House next Friday to discuss how to avoid the so-called fiscal cliff, the combination of big tax increases and spending cuts scheduled to begin Jan. 1.

House Speaker John Boehner says that the nation can reduce the deficit without raising taxes, While President Obama says he won't tolerate a plan without tax increases. Photo: Getty Images.

House Speaker John Boehner said this morning that raising tax rates as part of a budget deal will slow down economy and that GOP has "a lot of work to do." Aaron Zitner has details on Lunch Break.

Mr. Obama, in his first statement on the fiscal cliff since winning re-election Tuesday, said any deal must include tax increases on "the wealthy." He also called on the House to immediately pass a Senate bill that would extend the Bush-era tax cuts on household income under $200,000 a year for individuals and below $250,000 for couples.

Despite his urging for a bipartisan deal, Mr. Obama intends to force Republicans to defend their opposition to Democrats' bill in the Senate that extends those cuts. He will continue to press his case in coming weeks, administration officials said.

The Bush tax cuts are set to expire Jan. 1. At the same time, $1.2 trillion in automatic spending cuts over 10 years will begin if Congress and the White House don't act.

"If we're serious about reducing the deficit, we have to combine spending cuts with revenue, and that means asking the wealthiest Americans to pay a little more in taxes," Mr. Obama said in the East Room of the White House.

"I'm not wedded to every detail of my plan. I'm open to compromise," he added. "But I refuse to accept any approach that isn't balanced.…And on Tuesday night, we found out that the majority of Americans agree with my approach."

Mr. Obama also signaled that a deal would include changes to entitlement programs such as Medicare and Medicaid, but he didn't mention Social Security

The president didn't specifically mention raising tax rates on households earning more than $250,000 a year, as he did throughout his re-election campaign. Mr. Obama's remarks came after Mr. Boehner said Friday he is open to a deal that raises tax revenue but not rates, leaving open the possibility for a compromise that includes limiting or eliminating tax deductions or other tax breaks for those families.

Fiscal Cliff 101


White House press secretary Jay Carney, responding to questions after the president spoke, said Mr. Obama would veto any legislation that extends the Bush-era tax cuts for the top 2% of American income earners. At the same time, he didn't rule out extending the rates if they were linked to raising revenue from wealthy people by eliminating deductions.

Mr. Boehner responded to the president's statement by accepting the invitation to the White House meeting.

He reiterated his opposition to the Senate bill that would extend middle-income rates while allowing top rates to rise. He said he maintained a measure of hope that a wide-ranging deal was possible.

"The year 2013 should be the year we begin to solve our country's debt problem through entitlement reform and a new tax code with fewer loopholes and lower rates,'' Mr. Boehner said.

That echoed statements the Speaker made at a news conference before Mr. Obama spoke, when Mr. Boehner signaled he was open to more revenue by eliminating tax breaks as a part of broad based tax reform.

"Everything on the revenue side and everything on the spending side has to be looked at," Mr. Boehner said. "It's clear that there are a lot of special- interest loopholes in the tax code, both corporate and personal. It's also clear that there are all kinds of deductions, some of which make sense; others don't."

The statements from Messrs. Obama and Boehner Friday leave room for compromise. Elements could include new limits on tax deductions for businesses and wealthy individuals. Each year, Americans claim more than $1 trillion in tax deductions and bipartisan panels have called for curbs on these breaks.

Mr. Obama has several proposals in his 2013 budget that could become elements of a deal. They include reducing the value of all itemized tax deductions for households earning more than $250,000 to 28% from the current 35% limit; lifting tax rates on investment income for those households; and reinstating old limits on some tax breaks for the wealthy that were suspended by the Bush-era tax cuts. And he wants to impose a special minimum tax on the very high-income—those making more than $1 million a year. The White House also has focused on curbing other tax exemptions, such as those on interest from bonds issued by state and local governments and contributions to retirement plans. The White House has estimated the total package would raise about $584 billion over 10 years.

Mr. Obama plans to meet with CEOs and labor leaders next week to discuss the fiscal cliff, administration officials said.

—Damian Paletta and Laura Meckler contributed to this article.

Write to Carol E. Lee at and Janet Hook at