Obama pushes for $3.6trn in budget cuts

Stage set for new showdown with Republicans as US president targets the rich for $1.5trn of tax increases Barack Obama is expected to unveil plans to reduce the massive US deficit by about $3.6trn over the next decade. The plan looks set to spark yet more confrontation with his Republican critics. Roughly half of the savings would come from tax increases, according to people briefed on the proposals. The Republican opposition is staunchly against tax hikes. Obama will unveil the new proposals on Monday at the White House. They will be submitted to a congressional “super-committee” that was created in August to draw up a deficit-reduction plan. The president is also expected to propose nearly $250bn in cuts to spending on Medicare, the federal health care program that primarily benefits the elderly; $330bn in cuts to other mandatory benefit programs; and underline savings of $1trn from the withdrawal of troops from Iraq and Afghanistan. According to initial reports there would be no changes in social security and no increase in the Medicare eligibility age, which the president had considered this summer. Obama’s plans would include roughly $1.5trn in tax increases aimed mainly at wealthy Americans and corporations, people familiar with the proposal said. The president is set to unveil a “Buffett tax” aimed at those earning $1m or more a year and named after billionaire investor Warren Buffett, a persistent critic of low tax rates for the rich. The Republican House speaker, John Boehner, has made clear that he will not support any tax increases. Given opposition to Obama and tax increases, the Republican-controlled Congress is unlikely to pass the package. The super-committee must report its findings before 23 November otherwise $1.2trn in cuts to defence and entitlement programmes will go into effect automatically in 2013. Obama’s plans look set to spark a fierce debate as the two sides attempt to negotiate a compromise ahead of the deadline. Obama’s proposed Buffett tax, first revealed over the weekend, has already attracted sharp criticism. Any further tax increases on wealthy Americans or corporations will undoubtedly face a similar assault. By combining cuts and tax increases the president is attempting to be true to his promise of his “balanced approach” requiring “shared sacrifice”. In August the president took to the road to sell his vision of a balanced approach to tackling US debt. “If everybody took an attitude of shared sacrifice we could solve our deficit and debt problem next week,” Obama said. “I need you to send a message to folks in Washington: stop drawing lines in the sand.” Obama backed away from proposing sweeping changes to Medicare, following the advice of fellow Democrats that it would only give political cover to a privatisation plan supported by House Republicans that turned out to be unpopular with older Americans. Administration officials said 90% of the $248bn 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, and administration officials made clear as well that Obama would veto any Medicare cuts that were not paired with tax increases on upper-income people. The president’s plan also calls for cuts of $72bn over 10 years from Medicaid, the federal-state health care program for low-income people and the severely disabled. States, hospitals and advocates for the poor are expected to resist those. Monday’s proposals will be the president’s fourth package of deficit-reduction ideas this year. Poll figures show the electorate is losing faith in the president and his ability to tackle the US’s economic malaise. According to a recent Gallup poll 26% of Americans now approve of Obama’s record on the economy, 11 points lower than in May. The president has been making big moves to address the nation’s financial problems. This month he unveiled a $477bn jobs plan aimed at getting more Americans back to work. Boehner has attacked the jobs plan, saying high taxes, too much regulation and government interference are the real drains on job creation. “The members of the president’s cabinet are not doing their jobs if they aren’t constantly focused on removing impediments to job growth,” he said. “If they’re not focused on that, they should be fired.” Obama administration US economy Barack Obama United States guardian.co.uk

Posted by on September 18, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.