President Obama drew a sharp political and ideological battle line with his Republican and conservative critics Monday morning by unveiling a plan for an additional $3 trillion of deficit reduction over the coming decade that would include both spending cuts and tax increases. And he vowed to veto any legislation that seeks to cut the deficit through spending reductions alone.
In a Rose Garden speech laden with rhetorical challenges to House Speaker John Boehner of Ohio and other Republicans opposed to any tax increase to either slow the rate of growth of the $1.5 trillion annual deficit or help jumpstart the moribund economy, Obama said that wealthy Americans and corporations must pay their fair share of taxes in addressing the nation’s daunting fiscal and economic problems.
“I will not support any plan that puts all of 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 and the biggest corporations to pay their fair share. We are not going to have a one-sided deal that hurts the folks who are most vulnerable.”
Obama released the details for his plan for $1.5 trillion in tax increases, primarily on wealthy families making more than $250,000 a year, through a combination of letting the Bush-era tax cuts expire, closing loopholes and limiting the amount that high earners can deduct. The president called on the congressional “Super Committee” charged with recommending additional deficit savings, to undertake comprehensive tax reform that would lead to lower tax rates, eliminate wasteful tax breaks, reduce the deficit, boost job creation, and force people making more than $1 million a year to pay the same higher effective tax rate as middle-class families.
The proposal also includes $570 billion in adjustments to health and entitlement programs, including $248 billion to Medicare and $72 billion to Medicaid, and other mandatory programs. Administration officials said that the Medicare cuts would not come from an increase in the Medicare eligibility age, which is currently 65, while the politically sensitive Social Security program would be left unscathed.
The long-term deficit-reduction strategy follows closely on the heels of the president’s call for $450 billion of tax incentives and spending to help stimulate the economy and reduce the 9.1 percent unemployment rate. The president stressed that government investment in job creation and long-term debt reduction must go hand in hand, and that his deficit-reduction strategy calls for two dollars of spending cuts for every one dollar of new revenues.
Liberal and progressive groups generally applauded Obama’s “balanced” approach to job creation and deficit reduction, but GOP leaders quickly responded with distain: “Veto threats, a massive tax hike, phantom savings, and punting on entitlement reform is not a recipe for economic or job growth—or even meaningful deficit reduction,” Senate Republican Leader Mitch McConnell of Kentucky said in a statement. “The good news is that the Joint Committee is taking this issue far more seriously than the White House.”
Conservative Sen. Pat Toomey, R-Pa., a member of the select House-Senate committee that will recommend $1.5 trillion or more of deficit reduction later this fall, said: “I am concerned that [Obama’s] deficit-reduction strategy sometimes seems more defined by political posturing, such as recycling tax hikes that even lawmakers in his own party have publicly opposed. With the Select Committee’s deadline looming, we do not have time to waste on political games and pushing big tax increases that will only make our economy weaker for all Americans.”
The president’s comprehensive proposal pits Obama against Boehner, who just last week said the Republican party would not accept any tax increases and encouraged the bipartisan 12-member Super Committee to focus on reducing entitlement programs including Medicare, Medicaid and Social Security.
“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,” Boehner said in a statement.