Obama: 'No doubt' nation needs more tax revenue to lower deficit

President Obama insisted Sunday that additional tax revenue will need to be part of future deficit deals, but said hikes in tax rates may not be necessary.

In a pre-Super Bowl interview with CBS, the president outlined his vision for further deficit reduction, which he said was essential, but in a way that preserves the government's ability to continue spending on key programs.

He also emphasized that the seemingly continuous stream of Washington standoffs was wreaking havoc on confidence in the U.S. economy.

Republicans have insisted that the revenue side of the deficit equation was dealt with during "fiscal cliff" talks, which resulted in a compromise that saw rates climb on the nation's top earners. But Obama flatly rejected the notion that future talks would explicitly focus on spending.

"There is no doubt we need additional revenue, coupled with smart spending reductions, in order to bring down our deficit," he said.

Obama said that a serious deficit reduction plan would combine "smart spending cuts," reforms to healthcare programs, and tax reform that eliminates loopholes and specific deductions.

"If you combine those things together, then we can not only reduce our deficit, but we can continue to invest in things like education and research and development…without raising rates again," he said.

On entitlement programs tied to healthcare, Obama suggested there were significant savings to be found through reform.

"There's a lot of waste in the system, and there's things we can do to reduce healthcare costs," he said.

Obama's interview came just days after new data from the Commerce Department found that the economy actually shrank 0.1 percent in the fourth quarter of the year, driven primarily by significant drops in spending by the federal government and the defense industry. The latter category dropped 22 percent as defense contractors braced for possible sequestration spending cuts set to take effect at the beginning of the year if the "fiscal cliff" had taken effect. The deal struck to avoid the cliff delayed those cuts for two months, setting another round of legislative battles before March 1.

Obama said those sharp drops weighed on "a lot of positive signs in the economy," and said continued standoffs between the two parties were taking their toll.

"Washington cannot continually operate under a cloud of crisis, that freezes up consumers," he said. "We can't afford these self-inflicted wounds."