Obama calls for "incentives" to reach deficit reduction targets

President Barack Obama smiles during a break at a CBS News Town Hall Meeting on the economy, Wednesday, May 11, 2011, at the Newseum in Washington. (AP Photo/Carolyn Kaster) AP Photo/Carolyn Kaster

In a CBS News town hall with President Obama, Mr. Obama said that the federal government might need to impose targets for deficit reduction - and if those targets aren't met, "some cuts and tax increases start taking place."

In the hour-long town hall meeting, which will air Thursday morning between 8 and 9 a.m. ET on " The Early Show," the president said the most effective way to reduce the deficit might be to provide incentives for both parties to make a deal. Deficit reduction will be high on Congress' agenda this summer as the president and congressional leaders debate raising the debt limit.

"I think what we're going to end up having to do probably is to set some targets, and say, you know, those targets have to be hit if not automatically, some cuts and tax increases start taking place," Mr. Obama said, when asked by CBS News senior correspondent Harry Smith what the odds were that Republicans would agree to a tax hike. "That will give incentive for us to negotiate and figure something out," he added.

Special coverage: CBS News Town Hall on the Economy, with President Obama

The president emphasized, however, that the conversation will be ongoing.

"This is going to be a topic not just over the next couple months," he said. "This is going to be a values question for the American people over the next several years."

"I know my answer," Mr. Obama added. "And I'm going to be interested in having a vigorous debate with the Republicans about this issue."

Watch the town hall with the president, hosted by CBS News' Harry Smith, Erica Hill and Rebecca Jarvis, at 8 a.m. ET on "The Early Show."

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