Obama Unveils $3.6 Trillion Deficit Plan, Would up Taxes

On Monday President Barack Obama presented a $3.6 trillion plan to cut budget deficits.

President Barack Obama delivers a statement announcing his Plan for Economic Growth and Deficit Reduction, in the Rose Garden of the White House, Sept. 19, 2011. Photo: Pete Souza/The Official White House

On Monday the White House defined more than $3 trillion in deficit reduction measures that included $1.5 trillion in tax increases, $1 trillion in war savings and $580 billion or so in mandatory program savings.

“I will not support — I will not support — any plan that puts all the burden for closing our deficit on ordinary Americans. And I will veto any bill that changes benefits for those who rely on Medicare but does not raise serious revenues by asking the wealthiest Americans or biggest corporations to pay their fair share,” Mr. Obama said. “We are not going to have a one-sided deal that hurts the folks who are most vulnerable.”

Republicans were opposing any measures resembling tax hikes, and said they would hurt the struggling economy by increasing the burden on job-creating businesses. Republican leaders stuck to that position on Monday and quickly rejected Obama’s plan.

John Boehner, speaker of the House of Representatives and the top Republican in Congress, said in a speech in Ohio that “class warfare” was not leadership and taxing the rich would not get the economy going again.

“Giving the federal government more money would be like giving a cocaine addict more cocaine,” Boehner said in a speech to small business owners at the University of Cincinnati.

“The 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,” Mr. Boehner said. “And it is evident today that these barriers remain.”

While critics derided Obama’s plan as purely political, some analysts saw a sober bid to tackle big fiscal problems.

“I was very pleased with the president’s veto statement. I am a supporter of this,” said Howard Dean, a former Vermont governor and DNC chairman. “Are there a few things that maybe should have been done differently? Maybe so. But overall, this is a very good place to start and now we just have to make damn sure we don’t make any of the kind of irresponsible concessions that Republicans are going to ask for.”

“Obama’s new plan is both a serious legislative proposal and an effort to stake out his ground for his re-election campaign,” said Sarah Binder of the Brookings Institution.

“The most popular thing you can do to cut the deficit is to raise taxes on people making over a million dollars. That’s not just a sop to the Democratic base, that is a sop to roughly 65 percent of the country,” said James Carville, the longtime Democratic consultant. “So, good. If this signals something new, then great.”

“It was an effective opening bid,” said Matt Bennett, Senior Vice President for Public Affairs at the centrist-Democratic think tank Third Way. “He definitely planted a flag in the ground. He definitely communicated to his base and it was an opening bid in what is going to be a long negotiation.”

Obama’s plan, which will be sent to the “super committee” of six Republicans and six Democrats considering deficit reduction, proposes $3.6 trillion in savings over 10 years.

Mr. Obama’s plan does call for subtracting $320 billion from Medicare and Medicaid, building on savings required in his health care law.

The super committee must propose a deficit plan by November 23. Congress must then vote on the panel’s proposal by December 23 or automatic spending cuts will be triggered across government agencies, beginning in 2013.

Standing in a posh apartment on Manhattan’s Upper East Side, Obama said he was confident the American people supported his vision, and took a swipe at the Republicans opposing him.

“What has been clear over the past 2 1/2 years is we have not had a willing partner. … What we’ve seen is some irreconcilable differences, a fundamentally different vision about where America needs to go,” he said. [via Huff Post, Reuters and The New York Times]

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