Tax the rich, Obama says; GOP calls that class warfare

Published: Tuesday, Sept. 20 2011 12:18 a.m. MDT

President Barack Obama walks to the Oval Office after making a statement in the Rose Garden of the White House in Washington, Monday, Sept. 19, 2011. (AP Photo/Evan Vucci)

Associated Press

WASHINGTON — Drawing clear battle lines for next year's elections, a combative President Barack Obama on Monday demanded that the richest Americans pay higher taxes to help cut soaring U.S. deficits by more than $3 trillion. He promised to veto any effort by congressional Republican to cut Medicare benefits for the elderly without raising taxes as well.

"This is not class warfare. It's math," Obama declared, anticipating Republican criticism, which was quick in coming.

"Class warfare isn't leadership," House Speaker John Boehner said, in Cincinnati.

Obama's speech marked a new, confrontational stance toward Republicans after months of cooperation that many Democrats complained produced too many concessions. While the plan stands little chance of passing Congress, its populist pitch is one that the White House believes the public can support.

The president's proposal, which he challenged Congress to approve, would predominantly hit upper-income taxpayers and would also target tax loopholes and subsidies used by many larger corporations. It would spare retirees from any changes in Social Security, and it would direct most of the cuts in Medicare spending to health care providers, not beneficiaries.

Benefit programs wouldn't be unscathed. Obama's plan would reduce spending for those, including Medicare and Medicaid, by $580 billion. But with Republicans calling for massive cuts in entitlement programs, Obama said he would veto any legislation that cut Medicare benefits without raising new revenue.

His plan also would count savings of $1 trillion over 10 years from the withdrawal of U.S. troops from Iraq and Afghanistan.

The deficit-reduction plan represents Obama's longer-term follow-up to the $447 billion in tax cuts and new public works spending that he has proposed as a short-term measure to stimulate the economy. The new proposal also inserts the president's voice into the legislative discussions of a joint congressional "supercommittee" charged with recommending deficit reductions of up to $1.5 trillion.

Defending his emphasis on new taxes rather than only spending reductions, Obama said: "We can't just cut our way out of this hole."

The Republican reaction was swift and bluntly dismissive.

"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," said Senate Republican leader Mitch McConnell. "The good news is that the Joint Committee is taking this issue far more seriously than the White House."

The president announced his deficit reduction plan in a 20-minute speech from the Rose Garden at the White House. But even as he called for Congress to act and tackle the nation's escalating debt, he gave greater urgency to his separate, short-term jobs proposal. "I'm ready to sign a bill," he said. "I've got the pens all ready."

Indeed, the White House is determined not to let the president get trapped in a debate over austerity measures at a time that the economy is sputtering and unemployment doesn't appear to be budging from 9.1 percent.

Still, in calling for sizable tax revenue, Obama gave the congressional joint committee a choice: It could generate $1.5 trillion in new revenues through an overhaul of the tax code, or it could adopt his recommendations, most of them ideas recycled from his previous budget proposals, which were largely ignored by Congress. They include tax increases on high-income families, oil and gas companies and U.S.-based corporations that earn profits overseas.

Either way, Obama is unlikely to get his way. The committee would be hard pressed to undertake a wholesale restructuring of the tax code by its Thanksgiving deadline. And the president's own proposals have little chance of making their way out of Congress intact.

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