President Barack Obama unveiled Monday a plan to cut over $3 trillion from the federal budget deficit over the next 10 years through spending cuts and raising taxes on the wealthiest Americans.
“This is not class warfare. It’s math,” the president remarked. “If we are not willing to ask those who have done extraordinarily well to help America close the deficit, then the logic, the math, says everybody else has to do a whole lot more.”
His deficit blueprint does not address any changes to Medicare and Social Security. The plan also calls for a personal income tax overhaul that would generate $1.5 trillion in revenue enhancements, mostly from high-income earners. The $1.5 trillion is double the amount the Speaker of the House John Boehner (R-OH) and president initially agreed to before their “grand bargain” negotiations collapsed in July.
“Anybody who says we can’t change the tax code to correct that, anyone who signs some pledge to protect every single tax loophole as long as they live, they should be called out. They should have to defend that unfairness,” Obama declared.
Boehner and Senate Minority Leader Mitch McConnell (R-KY) were quick to challenge the president’s plan.
“Veto threats, a massive tax hike, phantom savings and punting reform is not a recipe for economic or job growth—or even meaningful deficit reduction. The good news is that the Joint Committee, aka supercommittee, is taking this issue far more seriously than the White House,” McConnell said.
Boehner struck a similar chord, saying Obama “has not made a serious contribution” to the deficit debate. “Pitting one group of Americans against another is not leadership. This administration’s insistence on raising taxes on job creators and its reluctance to take the steps necessary to strengthen our entitlement programs are the reasons the president and I were not able to reach an agreement previously, and it is evident today that these barriers remain.”
Specifically, the president’s plan calls for the following: lowering of tax rates for average Americans, eliminating wasteful spending and tax loopholes, reducing the deficit by $1.5 trillion, boosting job creation and overall economic growth, and instituting the so-called “Buffett Rule" to increase taxes on the wealthiest Americans. The proposal would generate $800 billion in savings by allowing the Bush tax cuts for high-end earners to expire and an additional $400 billion by limiting the tax benefits of charitable contributions. The balance of his plan’s savings would come from closing large tax loopholes, which benefit private jet owners, investment fund managers and gas and oil companies. A further $1 trillion in savings would be realized by drawing down the wars in Afghanistan and Iraq. .
President Obama's plan now goes to Congress for further review. The supercommittee, charged with formulating a deficit reduction plan, has until November 23 to unveil its recommendations.