(Fox News) – President Obama will unveil a new deficit reduction plan Monday anchored by $1.5 trillion in new taxes, a package that Republicans will surely deem dead-on-arrival after ruling out tax hikes as a way to rein in the debt.
The plan Obama is set to announce includes more than $2 trillion in entitlement cuts and tax increases over the next decade. While House Speaker John Boehner and other top Republicans have urged a newly formed bipartisan committee seeking long-term savings to avoid tax hikes, senior administration officials previewing the president’s plan said that approach is untenable.
Officials said the president would issue a veto threat for any bill that cuts Medicare “without asking the wealthiest Americans and biggest corporations to pay their fair share.”
Together with spending cuts enacted last month and projected savings from interest payments, the savings in the president’s plan total more than $3 trillion. The Obama administration is also counting another $1 trillion in savings over 10 years from winding down the wars in Iraq and Afghanistan, though that kind of accounting has been dismissed in past debates as a gimmick.
The most controversial part of the plan was already shaping up to be the proposed tax increases.
The plan includes the tax hikes Obama already proposed to pay for his $447 billion jobs plan — those proposals ranged from limits on deductions for wealthy filers to an end to certain corporate loopholes and subsidies for oil and gas companies. And it includes about $800 billion over 10 years from letting the Bush tax cuts expire for families making more than $250,000 a year.
In addition, officials said over the weekend the plan would include the so-called “Buffett Rule,” named after billionaire Warren Buffett who complained he was paying a lower tax rate than his secretary. The provision would set a new tax rate for those making more than $1 million a year.
In total, the new tax revenue Obama is seeking is nearly double the $800 billion that Boehner had been willing to consider in July, before the so-called “grand bargain” fizzled..
Based on early details of the plan, Republicans on Sunday accused the president of playing “class warfare.”
“Class warfare may make for really good politics but it makes for rotten economics,” GOP Rep. Paul Ryan of Wisconsin, the House Budget Committee chairman, said on “Fox News Sunday.”
One administration official acknowledged that the plan represented the president’s “vision,” and not a “legislative compromise.”
The plan includes $580 billion in cuts to mandatory benefit programs, including $248 billion from Medicare and $72 billion from Medicaid and other health programs.
It includes no changes in Social Security and no increase in the Medicare eligibility age, which the president had been willing to accept this summer.
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.
Officials said that while the tax changes would raise revenue, the goal would also be to lower rates.
President Obama will unveil a new deficit reduction plan Monday anchored by $1.5 trillion in new taxes, a package that Republicans will surely deem dead-on-arrival after ruling out tax hikes as a way to rein in the debt.
