Obama sets out ‘balanced’ deficit plan and asks top earners to pay fair share

Obama says half of $3tn deficit reduction will come from tax increases, but stresses: ‘It’s not class warfare – it’s math’ President Barack Obama came out swinging in a tough speech defending his plans to increase taxes on the rich as part of his plan to cut the US deficit, saying: “This is not class warfare – it’s math.” In the speech in the White House’s Rose Garden, the president set out plans to cut more than $3tn from the deficit over the next 10 years. Almost half of that money would come from tax increases. “Washington has to live within its means,” said the president. “For us to solve this problem, everybody … has to pay their fair share.” Over the weekend, Obama’s Republican critics blasted his plans to increase taxes on those earning over $1m – the so-called “Buffett tax” named after billionaire investor Warren Buffett, a frequent critic of the low taxes paid by the rich. Paul Ryan, chairman of the House of Representatives budget committee, called the plan “class warfare.” Obama is proposing to set a minimum tax on people making $1m or more in income. The measure would prevent millionaires and billionaires taking advantage of lower tax rates on investment earnings than the rates middle-income taxpayers pay on their wages. “Those who have done well, including me, should pay our fair share,” 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.” Obama called on Congress to approve a “balanced” approach to budget cuts, including tax hikes for the rich and corporations as well as savings from defence cuts and other spending cuts. The plan also includes modest changes to Medicare and Medicaid, the US social insurance programmes Republicans have targeted for larger overhauls. Obama said he would veto any bill that makes changes to Medicare without tax increases on the wealthy. “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,” he said. The plan is the administration’s latest move in the long-running power struggle with Republican opposition over deficit reduction. While Democrats have called for tax increases to be part of any deficit reduction effort, Republicans have rejected the idea of any tax increases. Obama’s proposal has no chance of passing Republican Congress, but is aimed at influencing a cross-party “super-committee” that is currently working on a savings plan that Congress could approve by the end of the year. If the committee can not reach an agreement, draconian cuts could be imposed across government agencies. Obama’s plan would raise $1.5tn in taxes, primarily on the wealthy and big corporations. The proposal also includes $580bn in adjustments to Medicare and Medicaid – but the president has ruled out an increase in the Medicare eligibility age. The speech met with instant condemnation from senior Republicans. Senate Republican leader Mitch McConnell said: “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.” House Speaker John Boehner said: “This administration’s insistence on raising taxes on job creators, and its reluctance to take the steps necessary to strengthen our entitlement programs, are the reasons the president and I were not able to reach an agreement previously – and it is evident today that these barriers remain.” But Treasury secretary Timothy Geithner said the president was proposing “modest reforms” of the US tax code that would make the system “more fair” and help tackle the budget deficit. Geithner told reporters: “If you do it sensibly through tax reform you’ll strengthen investment centres, you’ll make growth in the US stronger, you’ll make people more confident in the future, more likely to invest here. “That’s something we should all be working toward.” Barack Obama Obama administration US taxation United States US economy Warren Buffett Republicans US politics Dominic Rushe guardian.co.uk

Posted by on September 19, 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.