WASHINGTON (AP) — President Barack Obama will
propose $1.5 trillion in new taxes as part of a plan to identify more than $3
trillion in long-term deficit reduction and slow the nation's escalating
national debt.
Obama's tax plan is aimed predominantly at the
wealthy and draws sharp contrasts with congressional Republicans.
It comes just days after House Speaker John Boehner
ruled out tax increases to lower deficits. It also comes amid a clamor in his
own Democratic Party for Obama to take a tougher stance against Republicans.
And while the plan stands little chance of passing Congress, its populist pitch
is one that the White House believes the public can support.
The core of the president's plan totals just more
than $2 trillion in deficit reduction over 10 years. It combines the new taxes
with $580 billion in cuts to mandatory benefit programs, including $248 billion
from Medicare.
The administration also counts savings of $1
trillion over 10 years from the withdrawal of troops from Iraq and Afghanistan.
The deficit reduction plan represents an economic
bookend to the $447 billion in tax cuts and new public works spending that
Obama has proposed as a short-term measure to stimulate the economy and create
jobs. He's submitting his deficit fighting plan to a special joint committee of
Congress that is charged with recommending deficit reductions of up to $1.5
trillion over 10 years.
In a defiant note, administration officials made
clear Sunday that Obama would veto any Medicare benefit cuts that aren't paired
with tax increases on upper-income people.
Officials cast Obama's plan as his vision for
deficit reduction, and distinguished it from the negotiations he had with
Boehner in July as Obama sought to avoid a government default.
As a result, it includes no changes in Social
Security and no increase in the Medicare eligibility age, which the president
had been willing to accept this summer.
Moreover, the new tax revenue Obama is seeking is
nearly double the $800 billion that Boehner had been willing to consider in
July. Republicans were already lining up against the president's tax proposal
before they even knew the magnitude of what he intended to recommend.
"Class warfare may make for really good
politics but it makes for rotten economics," GOP Rep. Paul Ryan of
Wisconsin, the House Budget Committee chairman, said Sunday in reaction to one
Obama tax proposal to impose a minimum tax rate on wealthy filers.
Former President Bill Clinton on Monday dismissed
GOP claims that the tax on the wealthy would discourage jobs creation and
hamper economic growth.
"Republicans in Washington always say the same
thing," Clinton said on NBC's "Today" show. He called their
argument an insult to wealthy Americans, including many who don't mind paying
more.
Key features of Obama's plan, as described by
senior administration officials Sunday evening:
—$1.5 trillion in new revenue, which would include
about $800 billion realized over 10 years from repealing the Bush-era tax rates
for couples making more than $250,000. It also would place limits on deductions
for wealthy filers and end certain corporate loopholes and subsidies for oil
and gas companies.
—$580 billion in cuts in mandatory benefit
programs, including $248 billion in Medicare and $72 billion in Medicaid and
other health programs. Other mandatory benefit programs include farm subsidies.
—$430 billion in savings from lower interest
payment on the national debt.
By adding about $1 trillion in spending cuts
already enacted by Congress and counting about $1 trillion in savings from the
drawdown of military forces from Iraq and Afghanistan, the combined deficit
reduction would total more than $4 trillion over 10 years, senior
administration officials said.
Republicans have ridiculed the war savings as
gimmicky, but House Republicans included them in their budget proposal this
year and Boehner had agreed to count them as savings during debt ceiling
negotiations with the president this summer.
Obama backed away from proposing sweeping changes
to Medicare, following the advice of fellow Democrats that it would only give
political cover to a privatization plan supported by House Republicans that
turned to be unpopular with older Americans.
Administration officials said 90 percent of the
$248 billion in 10-year Medicare cuts would be squeezed from service providers.
The plan does shift some additional costs to beneficiaries, but those changes
would not start until 2017.
Illustrating Obama's populist pitch on tax revenue,
one proposal would set a minimum tax on taxpayers making $1 million or more in
income. The measure — Obama is going to call it the "Buffett Rule"
for billionaire investor Warren Buffett — is designed to prevent millionaires
from taking advantage of lower tax rates on investment earnings than what
middle-income taxpayers pay on their wages.
At issue is the difference between a taxpayer's tax
bracket and the effective tax rate that taxpayer pays. Millionaires face a 35
percent tax bracket, while middle income filers fall in the 15 or 25 percent
bracket. But investment income is taxed at 15 percent and Buffett has
complained that he and other wealthy people have been "coddled long
enough" and shouldn't be paying a smaller share of their income in federal
taxes than middle-class taxpayers.
Associated Press writer Ricardo Alonso-Zaldivar
contributed to this report.
Copyright
2011 The Associated Press.
