WASHINGTON — President Barack Obama today will unveil a plan to tame the nation’s rocketing federal debt that will draw a sharp contrast with the Republican vision and amount more to an opening play in the fall’s debate over the economy than another attempt at finding common ground with the GOP.
The president will propose $1.5 trillion in new taxes as part of a plan to find at least $3 trillion in budget savings over a decade, according to a person familiar with the matter. Combined with his earlier call for $450 billion in new stimulus, the proposal represents a more populist approach to the nation’s economic travails than compromises he had advocated this summer.
Obama will propose new taxes on the wealthy and a special new tax for millionaires, according to White House officials. But he won’t call for any changes in Social Security, officials say, and may seek less-aggressive changes to Medicare and Medicaid than previously considered. In particular, people say he is unlikely to call for an increase in the Medicare eligibility age from 65 to 67.
Coming as a congressional supercommittee goes to work to find budget savings, Obama’s position may delight Democrats, who have fretted that he is doing too little to solve the jobs crisis while being too willing to embrace major changes to Medicare and Social Security.
But his plan has little chance of passing and is already inflaming Republicans, who have vowed to oppose new taxes and have called for deep cuts in federal spending and entitlements. On Sunday, Republicans responded with vitriol to the proposal to create a special tax for millionaires.
“Class warfare may make for really good politics, but it makes for rotten economics,” Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, said on “Fox News Sunday.” “It adds further instability to our system, more uncertainty, and it punishes job creation.”
White House officials say Obama will push for a new minimum tax rate on millionaires as part of a rewrite of the tax code, compelling the wealthiest Americans to pay the same share of income in taxes as middle-class families.
The tax will target the top 0.3 percent of American earners, whose income often comes from investment profits, which are taxed at 15 percent — compared with the top tax bracket of 35 percent the wealthiest Americans would ordinarily pay.
Obama is planning to call the special tax the “Buffett Rule,” in reference to billionaire investor Warren Buffett, who has said the richest Americans should pay more in taxes.
“Right now, we’ve thrown a big wet blanket over the private- sector economy,” Senate Minority Leader Mitch McConnell, R-Ky., said on NBC’s “Meet the Press.” “We’ve borrowed too much. We’ve spent too much. We’re drastically over-regulating every aspect of the private sector in our country, and now we’re threatening to raise taxes on top of it. That’s not going to get the economy moving.”
Obama’s presentation probably will include a call for at least $300 billion in savings from Medicare and Medicaid. He also is likely to call for more spending cuts, perhaps by adjusting cost-of-living increases, paring farm subsidies and altering contributions to federal pensions.
The White House seeks to lower tax rates for most Americans and businesses overall while eliminating loopholes.
