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Obama says Republican proposals would put nonprofits at risk

President Barack Obama gestures while addressing his first news conference since his reelection, at the White House in Washington November 1
President Barack Obama gestures while addressing his first news conference since his reelection, at the White House in Washington November 1

By Mark Felsenthal and Jeff Mason

WASHINGTON (Reuters) - President Barack Obama warned on Tuesday that Republican tax proposals could threaten the collapse of hospitals and universities benefiting from charitable deductions.

"There's been a lot of talk that somehow we can raise $800 billion or $1 trillion worth of revenue just by closing loopholes and deductions," Obama said in a Bloomberg TV interview. "The only way to do that would be if you completely eliminated, for example, charitable deductions."

Senior administration officials met with representatives of the largest charities in the country at the White House Tuesday to press their case, a White House official said.

The president and congressional Republicans are clashing over how to prevent so-called fiscal cliff year-end tax increases and spending cuts that analysts say could throw the economy into a recession. The two sides are deadlocked over Obama's insistence that tax cuts enacted under former President George W. Bush expire for the wealthiest 2 percent of Americans.

Republicans oppose any increase in tax rates, but have said they are willing to agree to $800 billion in additional revenues to help ease a massive budget deficit that both sides want to see tamed.

However, House of Representatives Speaker John Boehner's proposal would lower tax rates, not raise them, and rely instead on closing loopholes and eliminating deductions.

Obama said on Tuesday he believes that no more than $300 billion to $400 billion in additional revenue can be raised through closing loopholes and cutting deductions.

The president and his aides argued that raising revenues solely by closing loopholes and eliminating deductions could cut deeply into programs that benefit the middle class, such as the mortgage interest tax deduction, and could have a devastating impact on organizations that depend on donations.

"If you eliminated charitable deductions, that means every hospital and university and not-for-profit agency across the country would suddenly find themselves on the verge of collapse," Obama said.

White House Chief of Staff Jack Lew, senior adviser Valerie Jarrett, Domestic Policy Council Director Cecilia Munoz and National Economic Council Director Gene Sperling met with non-profit and charity leaders, the official said.

The attendees included American Red Cross chief executive Gail McGovern, United Way Worldwide U.S. President Stacey Stewart, and Catholic Charities USA President the Reverend Larry Snyder. Together, those three organizations draw more than $6 billion in contributions annually.

(Writing by Mark Felsenthal; Editing by Eric Walsh)

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