Updated at 11:50 a.m. ET
Taking a defiant tone against Republicans unwilling to raise taxes in order to close the deficit, President Obama today unveiled a $3 trillion long-term deficit reduction plan that relies heavily on raising taxes on the wealthiest Americans.
“This is not class warfare — it’s math,” Mr. Obama said from the White House Rose Garden, addressing GOP critiques of his plan head on.
“The money has to come from some place,” he continued. “If we’re not willing to ask those who’ve done extraordinarily well to help America close the deficit… the math says everybody else has to do a whole lot more, we’ve got to put the entire burden on the middle class and the poor.”
The core of Mr. Obama’s deficit reduction plan is $1.5 trillion in new taxes. About $800 billion comes from repealing the Bush-era tax rates for couples making more than $250,000. The plan also closes certain corporate tax loopholes and limits certain tax deductions.
The president is also putting forward a measure he’s calling the “Buffett Rule” — named for billionaire investor Warren Buffett — to compel those making $1 million or more a year to pay the same overall rate as other taxpayers. Taxpayers making $1 million or more often make their fortune through investment income, which is taxed at 15 percent; the top income tax rate is 35 percent.
Even before the president unveiled it Monday, Republicans on Capitol Hill were declaring the president’s deficit reduction plan dead. On Sunday, House Budget Committee Chairman Paul Ryan said Mr. Obama’s plan signaled the president is too focused on his own re-election. “He’s in a political class warfare mode and campaign mode. And that’s not good for our economy,” Ryan said.
In response, Mr. Obama said, “I reject the idea that asking a hedge fund manager to pay the same tax rate as a plumber or teacher is class warfare. I think it’s just the right thing to do.”
The plan also includes about $580 billion in cuts to mandatory benefit programs, including $248 billion from Medicare. However, in a nod to his liberal base, the president made clear he would veto any plan to cut Medicare benefits that isn’t paired with tax increases on upper-income people. (Watch at left.)
The plan doesn’t touch Social Security, and there is no proposed increase in the Medicare eligibility age — a cost-saving proposal the president was willing to agree to earlier in the year, to the dismay of liberals.
To get to $3 trillion in savings, the White House is counting $1 trillion in savings over 10 years from the withdrawal of troops from Iraq and Afghanistan.
While Mr. Obama earlier this year was seeking a “grand bargain” with Republicans over deficit reduction, he’s now adopting a decidedly populist, combative tone designed to contrast his vision of the future with the GOP vision.
Mr. Obama specifically called out House Speaker John Boehner, blaming him for their inability to come to an agreement for deficit reduction earlier in the year. Mr. Obama said they were close to the “grand bargain,” but “Unfortunately, the speaker walked away.”
He also blasted Boehner for delivering an economic speech last week in which he came out against any plan for deficit reduction that included raising taxes. “The speaker says we can’t have it ‘My way or the highway’ and then basically says ‘My way or the highway,’” Mr. Obama said.
Mr. Obama also took a shot at Ryan’s budget blueprint, which proposed turning Medicare into a voucher system. “While we do need to reduce health care costs, I’m not going to allow that to be an excuse for turning Medicare into a voucher program that leaves seniors at the mercy of the insurance industry,” he said.
The president said that trying to significantly reduce the deficit without raising taxes on the wealthy and corporations would lead to crumbling infrastructure, second-rate schools and a lack of investments in critical research.
“That’s unacceptable to me, [and] that’s unacceptable to the American people,” Mr. Obama said. “It will not happen on my watch. I will not support any plan that puts all the burden for closing the deficit on ordinary Americans.”
Mr. Obama will send his deficit reduction plan to Congress as a means of paying down the debt, as well as a means of paying for the $447 billion economic plan he unveiled earlier this month. Larger than most people expected, that plan includes an extension of unemployment benefits, investments in areas like infrastructure, and tax cuts for small businesses and individuals.
The president urged Congress to pass the economic plan right away. “There shouldn’t be any reason for Congress to drag its feet,” he said. “I’m ready to sign a bill. I’ve got the pens all ready.”
Specifically, Mr. Obama will send his deficit reduction plan to the so-called congressional “super committee” tasked with finding at least $1.2 trillion in budget savings by Thanksgiving. The “super committee” was created as part of a deal to raise the debt ceiling. That deal also included $1 trillion in budget savings that have already been signed into law.
(Watch Mr. Obama criticize Boehner’s deficit reduction ideas, at left.)
