In a teleconference from Washington, Grassley also said the sheer scope of recent and proposed spending to shore up the U.S. economy demands the federal government be held accountable to taxpayers and that the money be tracked.
"If the recession is over in two years and we have rapid economic growth, yes, I think it (cutting the deficit) can be but just barely," Grassley said, adding that if it had been a Republican president saying this, "everybody would be laughing."
The comments came on the heels of Obama's first speech before Congress and in advance of his first budget, which will be unveiled Thursday.
Grassley called for simplification of the tax system and suggested a flat tax rate for the income tax or a national sales tax of 0.23 percent.
"States rely more on sales tax than they do income tax to raise money," he said.
"Now, it wouldn't do away with state sales tax … But there's also a great deal of economic good comes from a national sales tax. And that is the marketplace making decisions instead of political leaders making decisions. But, also, I think you can use the same arguments in support of a flat rate income tax."
Grassley said he expects to be asked to participate in White House discussions on healthcare reform, saying he's particularly concerned about rural healthcare and would appreciate more than 48 hours notice so he can juggle his schedule. He said he turned down the last invitation because he hadn't received enough advance notice.