President Obama is going call for $1.5 trillion in tax increases, mostly on the wealthy, through a combination of closing loopholes and limiting the amount that high earners can deduct.
Obama’s proposal will also include $580 billion in adjustments to health and entitlement programs, including $248 billion to Medicare and $72 billion to Medicaid.
However, to Republicans, President Barack Obama and Democrats are waging class warfare by proposing tax reforms that would make wealthy Americans pay more than they do now.
On Sunday Congressional Republicans were already taking apart one element of the proposal that the administration let out early: the so-called Buffett Rule. This rule is named after the billionaire investor Warren E. Buffett, who has complained that he is taxed at a lower rate than his employees.
The rule calls for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers.
“When you pick one area of the economy and you say, ‘We’re going to tax those people because most people are not those people,’ that’s class warfare,” Sen. Lindsey Graham, R-South Carolina, said Sunday on CNN’s “State of the Union.”
At the same time Democrats refer to political warfare, as Republicans block the Obama administration’s initiatives to better their chances of defeating him in next year’s election.
“I don’t think people like that style of politics and that’s the reality … we’ll be facing in November 2012,” Sen. Dick Durbin, D-Illinois, said on the same program.
Senator Mitch McConnell of Kentucky, the Republican leader, said appearing on the NBC program “Meet the Press”: “It’s a bad thing to do in the middle of an economic downturn. And of course the economy, some would argue, is even worse now than it was when the president signed the extension of the current tax rates back in December.”
“We have a difference of opinion on how best to fix these problems,” House Budget Committee Chairman Paul Ryan told “Fox News Sunday.”But when the president does things like this, it leads you to believe that he’s not in bipartisan consensus-making mood. He’s in a political class warfare mode and campaign mode. And that’s not good for our economy.”
The criticism also came from Republican presidential candidate Herman Cain who told that raising taxes on investment income and other targeted areas was “a bad idea.”
You tax something more, you get less of it,” Cain said and added that “if you were to tax the millionaires more using that bad idea, it still doesn’t solve the problem of how to reduce the spending. So, that’s just class warfare flowering in my opinion, and it’s not going to help.”
At the same time Roger Hickey, co-director of the Campaign for America’s Future said in a statement: “The report that the president is planning to ask millionaires and billionaires to pay taxes at a higher rate than their secretaries pay is welcome news that will be wildly popular with voters. We applaud the president for heeding the advice from progressives that he go big on his jobs plan.”
Former president Bill Clinton also supported Obama’s plan: “Right now we don’t need what the Republicans want, which is further spending cuts,” Clinton said. For Republicans, he added, “conflict seems to be better politics,” but overall, “cooperation is better economics.”
Meanwhile, a special deficit reduction committee created under last month’s debt ceiling agreement has started working among the longstanding political divisions on key issues.
The 12-member committee, evenly divided between Democrats and Republicans in the House and Senate, has to draft a $1.5 trillion deficit reduction plan until November 23.
The plan can win congressional approval by December 23. Otherwise, more than $1 trillion in across-the-board spending cuts will go into effect, on top of $900 billion in cuts already mandated under the debt ceiling deal. [via The New York Times and CNN]