Obama 'confident' GOP will relent on tax increases

With tax hikes and federal spending cuts only weeks away, President Barack Obama said he is 'optimistic' a deal will be met to avoid the so-called fiscal cliff and anticipates Republicans will not hold middle-class taxes 'hostage' in budget negotiations.

"I remain optimistic that there are enough people of goodwill in this town that recognize our economy will be much better off; American families will be much better off if we get this done," the president said in an interview with Barbara Walters on ABC, which aired in part on Tuesday. "The most important thing we can do is make sure middle-class taxes do not go up on Jan. 1, and I'm pretty confident that Republicans would not hold middle class taxes hostage to try to protect tax cuts for high income individuals."

While the White House and Republicans leaders have swapped plans and spoken about the negotiations to tame the nation's debt, no deal has been met to avoid the series of automatic federal spending cuts and tax rate increases set to go into effect at the beginning of next year.

While Obama and Democrats' deficit plan calls for extending Bush-era tax cuts for 98% of Americans while allowing rates to return to higher 1990s levels on income over $250,000, Republicans advocate for an extension of the current tax rates for all tax brackets as well as reforming the tax code and closing tax loopholes and deductions to generate revenue.

Obama's comments aired on the heels of a campaign-style event in Michigan on Monday where the president rallied support for the White House's budget proposal and remained steadfast that wealthier Americans must pay higher taxes.

"It is entirely possible for us to come up with a deal but time is running short," Obama said.