WASHINGTON (CN) - President Obama reaffirmed on Friday that he does not support extending tax cuts for high-income earners, saying media reports suggesting that his administration was open to temporarily extending Bush-era tax cuts for both middle and upper income earners was the "wrong interpretation."
"I continue to believe that extending permanently the upper-income tax cuts would be a mistake and that we can't afford it," Obama said at a press conference after G20 meetings in Seoul, South Korea.
His comments were in response to a question about Senior White House Adviser David Axelrod's remarks last week that the administration might be open to temporarily extending tax cuts for upper-income earners in order to secure cuts for the middle class.
"We have to deal with the world as we find it," Axelrod told the Huffington Post. Axelrod said the administration was concerned about continued temporary extensions of tax cuts for the wealthy, "But I don't want to trade away security for the middle class in order to make that point," he said.
Obama said Axelrod's remarks did not mean the administration was ready to compromise.
"That is the wrong interpretation because I haven't had a conversation with Republican and Democratic leaders," Obama said. "Here's the right interpretation: I want to make sure that taxes don't go up for middle-class families starting on January 1st. That's my number-one priority."
Obama plans to meet with Republican and Democratic leaders late next week to discuss the issue.
"And my hope is, is that somewhere in between there we can find some sort of solution," he said. "But I'm not going to negotiate here in Seoul."
If the tax cuts, which were enacted in 2001 and 2003, are not extended, taxes will go up on Jan. 1.
Extending tax cuts for those who make $250,000 or more per year will cost the government $700 billion. Obama argues that extending tax cuts for the biggest earners will not significantly boost the economy because upper-income earners are less likely to spend the money. Such a move would be "fiscally irresponsible," he said.
Republicans argue that upper-income earners include many small-business owners, and letting their tax cuts expire will hamper their ability to create jobs.
When asked if the country could afford the trillions it will cost to extend the tax cuts, which are deficit-funded, Obama said the middle class was in need of permanent tax relief after seeing their wages shrink 5 percent from 2001 to 2009. He also said he believes it's good for the economy "right now," during a time of recovery.
He acknowledged that government spending and tax revenues are "way out of balance" and said he would look for areas to make cuts while continuing to fund research and development, education, Social Security and Medicare.