Obama: More Tax Increases Possible to Reduce the Deficit

President Barack Obama greets people as he visits Island Snow for shave ice in Kailua, Hawaii, during his holiday vacation, Thursday, Jan 3, 2013. (AP)

President Barack Obama said he's willing to consider more spending cuts to lower the deficit, as long as they're coupled with more tax reforms.

Using Saturday's weekly address to praise Congress' last-minute deal to avert the "fiscal cliff," Obama said it's "just one more step" in the larger effort to boost the economy and reduce federal deficits. He said this week's deal raised taxes on the wealthiest Americans while preventing a middle-class tax hike that could have thrown the country back into recession.

"I believe we can find more places to cut spending without shortchanging things like education, job training, research and technology all which are critical to our prosperity in a 21st century economy," Obama said, speaking from Hawaii where he is finishing his holiday vacation with his family. "But spending cuts must be balanced with more reforms to our tax code. The wealthiest individuals and the biggest corporations shouldn’t be able to take advantage of loopholes and deductions that aren’t available to most Americans."

Obama fired a warning shot to members of Congress over what's shaping up to be the next big partisan battle: the debt ceiling, which must be dealt with by the end of February.

"One thing I will not compromise over is whether or not Congress should pay the tab for a bill they’ve already racked up," he said. "If Congress refuses to give the United States the ability to pay its bills on time, the consequences for the entire global economy could be catastrophic. The last time Congress threatened this course of action, our entire economy suffered for it. Our families and our businesses cannot afford that dangerous game again."