President Obama will announce a proposal on Monday to tame the nation’s rocketing federal debt, calling for $1.5 trillion in new revenue as part of a plan to find more than $3 trillion in budget savings over a decade, senior administration officials said.The proposal draws a sharp contrast with Republicans and amounts more to an opening play in the fall debate over the economy than another attempt to find common ground with the opposing party.
Combined with his call this month for $450 billion in new stimulus, the proposal represents a more populist approach to confronting the nation’s economic travails than the compromises he advocated earlier this summer.
Obama will propose new taxes on the wealthy, a special new tax for millionaires, and eliminating or scaling back a variety of loopholes and deductions, officials say. About half of the tax savings would come from the expiration next year of the George W. Bush administration tax cuts for the wealthy.
But the president won’t call for any changes in Social Security, officials say, and is seeking less-aggressive changes to Medicare and Medicaid than previously considered. He will propose $320 billion in health-care savings but will not include raising the Medicare eligibility age from 65 to 67, officials said.
Any reduction in Medicare benefits would not begin until 2017, they said. Other cuts in domestic spending would bring the total spending savings to $580 billion. About $1 trillion in savings is also expected from winding down the wars in Iraq and Afghanistan.
Obama will pledge to veto any cut in entitlements that does not also include increases in tax revenue.
Coming as a congressional supercommittee goes to work to find budget savings this fall, Obama’s position will probably delight Democrats, who have fretted for months that he is doing too little to solve the nation’s jobs crisis while being too willing to embrace major changes to Medicare and Social Security.
But his plan has little chance of passing and is already inflaming Republicans, who have vowed to oppose new taxes and have called for deep cuts in federal spending and entitlements. On Sunday, Republicans responded with vitriol to the proposal to create a special tax for millionaires.
“Class warfare may make for really good politics, but it makes for rotten economics,” Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, said on “Fox News Sunday.” “It adds further instability to our system, more uncertainty, and it punishes job creation.” Last week, Obama told supporters at a fundraiser in Washington that the upcoming debate will crystallize the difference between his views and those of the GOP.
He said that “2012 is going to offer a clearer contrast than I think we’ve ever seen before,” adding: “If you see the direction that the Republican Party is now going in, you have a party that offers a fundamentally different vision of where America should be, and what we should be aspiring to, and what our core values are.” White House officials said Obama will push for a new minimum tax rate for millionaires as part of a rewrite of the U.S. tax code. The measure is designed to compel the wealthiest Americans to pay the same share of income in taxes as middle-class families.
Obama’s debt-reduction plan: $3 trillion in savings, tax revenue
