President Obama on Monday 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 opposing party.
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 call earlier this month for $450 billion in new stimulus, the proposal represents a more populist approach to confronting the nation’s economic travails than the compromises he 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 familiar with the matter 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 this fall, Obama’s position will probably delight Democrats, who have fretted for months that he is doing too little to solve the nation’s 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.”
Last week, Obama told supporters at a fundraiser in Washington that the upcoming debate will crystallize the difference between his views and the GOP’s.
“2012 is going to offer a clearer contrast than I think we’ve ever seen before,” Obama said. “If you see the direction that the Republican Party is now going in, you have a party that offers a fundamentally different vision of where America should be, and what we should be aspiring to, and what our core values are.”
White House officials say Obama will push for a new minimum tax rate on millionaires as part of a rewrite of the U.S. tax code. The measure is designed to compel the wealthiest American to pay the same share of income in taxes as middle-class families.
The proposed tax, which Democrats welcomed, 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 that the wealthiest Americans would ordinarily pay.
Obama is planning to call the special tax the “Buffett Rule,” in reference to the billionaire investor Warren Buffett, who has said that the richest Americans should pay more in taxes. (Buffett stepped down from The Washington Post’s board of directors this year.)