It's about time someone in Washington stood up and responsibly addressed the issues. Better still that it's the president actually looking and acting presidential. Of course, politics is driving the timing of this initiative, as it too often does. But we are approaching the ultimate political season: a presidential election year. And a lot is at stake. So there is little chance this plan will pass the Republican-led House. But it does set out clearly what Obama and the Democrats stand for and will campaign for in 2012--and what and who they will be campaigning against.
From a report from the Associated Press:
WASHINGTON — In a blunt rejoinder to congressional Republicans, President Barack Obama called for $1.5 trillion in new taxes Monday, part of a total 10-year deficit reduction package totaling more than $3 trillion. He vowed to veto any deficit reduction package that cuts benefits to Medicare recipients but does not raise taxes on the wealthy and big corporations. "We can't just cut our way out of this hole," the president said.
The president's proposal would predominantly hit upper income taxpayers but would also reduce spending in mandatory benefit programs, including Medicare and Medicaid, by $580 billion. It also counts savings of $1 trillion over 10 years from the withdrawal of troops from Iraq and Afghanistan.
The deficit reduction plan represents an economic bookend to the $447 billion in tax cuts and new public works spending that Obama has proposed as a short-term measure to stimulate the economy and create jobs. And it gives the president a voice in a process that will be dominated by a joint congressional committee charged with recommending deficit reductions of up to $1.5 trillion.
His plan served as a sharp counterpoint to Republican lawmakers, who have insisted that tax increases should play no part in taming the nation's escalating national debt. Obama's plan would end Bush-era tax cuts for top earners and would limit their deductions. "It's only right we ask everyone to pay their fair share," Obama said from the Rose Garden at the White House.
In issuing his threat to veto any Medicare benefits that aren't paired with tax increases on upper-income people, Obama said: "I will not support any plan that puts all the burden for closing our deficit on ordinary Americans." Obama added: "This is not class warfare. It's math." [Budget deficit-reduction math, that is.]
---"Obama announces debt plan built on rich," by Jim Kuhnhenn, Associated Press, on msnbc.com (9.19.11)
But President Obama really does believe in these principles and this type of plan--although he understands that broader, deeper social security and Medicare reform will be needed. It's the beginning of the campaign season, it's reaching out to his base, but it's also setting the opening position in any future negotiations.
It is what he has always generally stood for. But there can be little doubt he was rocked off balance by the irresponsible, win-at-any-cost (to the country) tactics of the Tea Party-driven Republican Party and its anachronistic agenda--an agenda that would return America to the economic, societal and governmental environment of the early 20th century. Much less taxation; much smaller government. (That is, less tax to starve and force smaller government, and fewer, smaller government support programs and services.) What could be simpler--or more irresponsible? These are the social support programs necessary for the education, health and productivity of Americans, and in turn for the strength and growth of the American economy.
And let's be honest, every authoritative economic analysis has concluded that the budget deficit cannot be closed by responsible budget cuts alone. Revenues must be raised, eventually on a broader base, but for now on those higher-income taxpayers. A 3% or so increase in taxes paid will not likely decrease their discretionary spending, and therefore will not create a drag on economic recovery. But, including those with incomes of $250K may be setting the bar too low, as Buffet himself pointed out, but somewhere between there and $1 million there is surely an appropriate number. And certainly, most corporate tax loopholes and subsidies are long past their useful and defensible lives, if they ever were defensible. There is a social equity principle to be honored here as well, as the president so eloquently embraces (below).
So what is the breakdown of President's plan? And what did President Obama actually have to say about it? More from the AP article:
It is what he has always generally stood for. But there can be little doubt he was rocked off balance by the irresponsible, win-at-any-cost (to the country) tactics of the Tea Party-driven Republican Party and its anachronistic agenda--an agenda that would return America to the economic, societal and governmental environment of the early 20th century. Much less taxation; much smaller government. (That is, less tax to starve and force smaller government, and fewer, smaller government support programs and services.) What could be simpler--or more irresponsible? These are the social support programs necessary for the education, health and productivity of Americans, and in turn for the strength and growth of the American economy.
And let's be honest, every authoritative economic analysis has concluded that the budget deficit cannot be closed by responsible budget cuts alone. Revenues must be raised, eventually on a broader base, but for now on those higher-income taxpayers. A 3% or so increase in taxes paid will not likely decrease their discretionary spending, and therefore will not create a drag on economic recovery. But, including those with incomes of $250K may be setting the bar too low, as Buffet himself pointed out, but somewhere between there and $1 million there is surely an appropriate number. And certainly, most corporate tax loopholes and subsidies are long past their useful and defensible lives, if they ever were defensible. There is a social equity principle to be honored here as well, as the president so eloquently embraces (below).
So what is the breakdown of President's plan? And what did President Obama actually have to say about it? More from the AP article:
Key features of Obama's plan:
—$1.5 trillion in new revenue, which would include about $800 billion realized over 10 years from repealing the Bush-era tax rates for couples making more than $250,000. It also would place limits on deductions for wealthy filers and end certain corporate loopholes and subsidies for oil and gas companies.
—$580 billion in cuts in mandatory benefit programs, including $248 billion in Medicare and $72 billion in Medicaid and other health programs. Other mandatory benefit programs include farm subsidies and federal employee benefits. Administration officials said 90 percent of the $248 billion in 10-year Medicare cuts would be squeezed from service providers. The plan does shift some additional costs to beneficiaries, but those changes would not start until 2017.
—$430 billion in savings from lower interest payment on the national debt.
— $1 trillion in savings from drawing down military forces from Iraq and Afghanistan.
In presenting his plan (and platform), President Obama brought out his strongest in content, conviction, and tone. It sounded again like he was mounting the campaign platform, again laying down political stakes. The time for indulging major compromise efforts will now have to be set aside for a season--for the re-election campaign begins here and now. From the president's speech today.
[...] Everyone knows we have to do more, and a special joint committee of Congress is assigned to find more deficit reduction. So, today, I'm laying out a set of specific proposals to finish what we started this summer -- proposals that live up to the principles I've talked about from the beginning. It's a plan that reduces our debt by more than $4 trillion, and achieves these savings in a way that is fair -- by asking everybody to do their part so that no one has to bear too much of the burden on their own.
All told, this plan cuts $2 in spending for every dollar in new revenues. In addition to the $1 trillion in spending that we've already cut from the budget, our plan makes additional spending cuts that need to happen if we're to solve this problem. We reform agricultural subsidies -- subsidies that a lot of times pay large farms for crops that they don't grow. We make modest adjustments to federal retirement programs. We reduce by tens of billions of dollars the tax money that goes to Fannie Mae and Freddie Mac. We also ask the largest financial firms -- companies saved by tax dollars during the financial crisis -- to repay the American people for every dime that we spent. And we save an additional $1 trillion as we end the wars in Iraq and Afghanistan.
These savings are not only counted as part of our plan, but as part of the budget plan that nearly every Republican on the House voted for.
Finally, this plan includes structural reforms to reduce the cost of health care in programs like Medicare and Medicaid. Keep in mind we've already included a number of reforms in the health care law, which will go a long way towards controlling these costs. But we're going to have to do a little more. This plan reduces wasteful subsidies and erroneous payments while changing some incentives that often lead to excessive health care costs. It makes prescriptions more affordable through faster approval of generic drugs. We’ll work with governors to make Medicaid more efficient and more accountable. And we’ll change the way we pay for health care. Instead of just paying for procedures, providers will be paid more when they improve results -- and such steps will save money and improve care.
These changes are phased in slowly to strengthen Medicare and Medicaid over time. Because 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. And I'm not going to stand for balancing the budget by denying or reducing health care for poor children or those with disabilities. So we will reform Medicare and Medicaid, but we will not abandon the fundamental commitment that this country has kept for generations.
And by the way, that includes our commitment to Social Security. I've said before, Social Security is not the primary cause of our deficits, but it does face long-term challenges as our country grows older. And both parties are going to need to work together on a separate track to strengthen Social Security for our children and our grandchildren.
[...] But all these reductions in spending, by themselves, will not solve our fiscal problems. We can’t just cut our way out of this hole. It’s going to take a balanced approach. If we’re going to make spending cuts -- many of which we wouldn’t make if we weren’t facing such large budget deficits -- then it’s only right that we ask everyone to pay their fair share.
You know, last week, Speaker of the House John Boehner gave a speech about the economy. And to his credit, he made the point that we can’t afford the kind of politics that says it’s “my way or the highway.” I was encouraged by that. Here’s the problem: In that same speech, he also came out against any plan to cut the deficit that includes any additional revenues whatsoever. He said -- I'm quoting him -- there is “only one option.” And that option and only option relies entirely on cuts. That means slashing education, surrendering the research necessary to keep America’s technological edge in the 21st century, and allowing our critical public assets like highways and bridges and airports to get worse. It would cripple our competiveness and our ability to win the jobs of the future. And it would also mean asking sacrifice of seniors and the middle class and the poor, while asking nothing of the wealthiest Americans and biggest corporations.
So the Speaker says we can’t have it "my way or the highway," and then basically says, my way -- or the highway. (Laughter.) That’s not smart. It’s not right. If we’re going to meet our responsibilities, we have to do it together.
[...] It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million.
Anybody who says we can't change the tax code to correct that, anyone who has signed some pledge to protect every single tax loophole so long as they live, they should be called out. They should have to defend that unfairness -- explain why somebody who's making $50 million a year in the financial markets should be paying 15 percent on their taxes, when a teacher making $50,000 a year is paying more than that -- paying a higher rate. They ought to have to answer for it. And if they're pledged to keep that kind of unfairness in place, they should remember, the last time I checked the only pledge that really matters is the pledge we take to uphold the Constitution.
Now, we're already hearing the usual defenders of these kinds of loopholes saying this is just "class warfare." I reject the idea that asking a hedge fund manager to pay the same tax rate as a plumber or a teacher is class warfare. I think it's just the right the thing to do. I believe the American middle class, who've been pressured relentlessly for decades, believe it's time that they were fought for as hard as the lobbyists and some lawmakers have fought to protect special treatment for billionaires and big corporations. [Amen.]
Nobody wants to punish success in America. What’s great about this country is our belief that anyone can make it and everybody should be able to try -– the idea that any one of us can open a business or have an idea and make us millionaires or billionaires. This is the land of opportunity. That’s great. All I’m saying is that those who have done well, including me, should pay our fair share in taxes to contribute to the nation that made our success possible. We shouldn’t get a better deal than ordinary families get. And I think most wealthy Americans would agree if they knew this would help us grow the economy and deal with the debt that threatens our future.
It comes down to this: We have to prioritize. Both parties agree that we need to reduce the deficit by the same amount -- by $4 trillion. So what choices are we going to make to reach that goal? Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both.
Either we gut education and medical research, or we’ve got to reform the tax code so that the most profitable corporations have to give up tax loopholes that other companies don’t get. We can’t afford to do both.
This is not class warfare. It's math. (Laughter.) The money is going to have to come from someplace. And if we're not willing to ask those who've done extraordinarily well to help America close the deficit and we are trying to reach that same target of $4 trillion, then the logic, 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. We've got to scale back on the investments that have always helped our economy grow. We've got to settle for second-rate roads and second-rate bridges and second-rate airports, and schools that are crumbling.
That's unacceptable to me. That's unacceptable to the American people. And it will not happen on my watch. I will not support -- I will not support -- any plan that puts all 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 or 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.
[Amen, and Amen.]
Another link to the AP article on msnbc.com:
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