The rich must pay fair share of deficit cuts
WASHINGTON: An impassioned President Barack Obama set up an acerbic and personal clash with Republicans on Monday, demanding $1.5 trillion in new taxes on the rich in a plan aimed at slashing the deficit.
“This is not class warfare, it is maths,” Obama declared, arguing that without tax increases on those who could afford it, the budget gap, which is casting a shadow over future generations of Americans, could never be closed.
“All I’m saying is that those who have done well, including me, should pay their fair share in taxes,” Obama said in a speech that effectively staked out the ground on which the 2012 presidential election will likely be fought.
A fiery, populist Obama laid out a plan which few experts believe has any chance of passing Congress, but which will make clear the battle lines between the White House and Republicans on the lumbering economy.
“We can’t just cut our way out of this hole,” Obama, said in in the White House Rose Garden, laying out his plans to cut $3.0 trillion from the deficit with a mixture of spending cuts and tax hikes.
“It is only right we ask everyone to pay their fair share,” Obama said, in a direct challenge to House of Representatives speaker John Boehner, who has categorically ruled out any tax increases to trim the budget gap.
“We can’t afford these special lower rates for the wealthy. We can’t afford them when we are running these big deficits,” Obama said, fighting for the end of tax cuts for the rich passed by former president George W. Bush.
“Middle class taxpayers shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward. It’s hard to argue against that,” said Obama, who has seen his approval ratings hammered by the slowed economy.
In a sign of the antipathy between Obama and Republican leaders after months of political confrontations, the president took personal aim at Boehner’s refusal to contemplate any tax revenue raises.
“The speaker says we can’t have it ‘my way or the highway” and then basically says ‘my way or the highway.”
“That’s not smart. It’s not right.”
Obama’s plan amounted to suggestions to a congressional super-committee charged with finding up to $1.5 trillion dollars in deficit cuts by November.
The president threatened to veto any bill produced by Congress that was based on cutting medical benefits for the elderly but did not include increased revenues drawn from higher taxes on the rich and corporations.
Obama’s plan effectively forced Republicans to defend continued favourable tax treatment for the wealthiest Americans and corporations while unemployment is at 9.1 percent and economic frustration stalks the United States.
But Republicans, who say tax hikes would penalise small business and lower growth, reacted with contempt to his speech.
“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 Mitch McConnell, the top Republican in the Senate.
“The good news is that the (super-committee) is taking this issue far more seriously than the White House.”
Mitt Romney, a leading Republican contender to take on Obama in the 2012 election, also rejected his plans as the action of a president who he portrays as out of his depth on the economy.
“President Obama’s plan to raise taxes will have a crushing impact on economic growth,” Romney said.
“Higher taxes mean fewer jobs – it’s that simple. This is yet another indication that President Obama has no clue how to bring our economy back.”
Obama’s proposals would bring total deficit cutting plans over the next decade to $4.4 trillion, officials said.
That topline figure includes $1.2 trillion in cuts in federal discretionary spending already agreed by Obama in August as part of a compromise which ended a standoff with Republicans over raising the federal debt ceiling.
It includes $580 billion in spending cuts across all mandatory spending programmes and $1.1 trillion of savings realised from drawing down US troop numbers in Afghanistan and Iraq.
Tax reform would result in $1.5 trillion in savings, and a further $430 billion will be found in additional interest savings elsewhere.
Included in the spending cuts will be $248 billion in savings from Medicare programmes for the elderly and $72 billion in cuts from the Medicaid service for the poor, officials said.
The tax portion includes $800 billion that would be saved by letting Bush-era tax cuts on individuals earning over $200,000 a year expire, a provision that will be fiercely fought by Republicans.