US President Barack Obama yesterday was to call for new deficit cuts of US$3 trillion, but warned Republicans he would veto any bill that trims healthcare for the elderly without hiking taxes on the rich.
Obama was to lay out a series of proposals that include a broad overhaul of the tax code designed to raise US$1.5 trillion, partly by letting previous tax cuts for the wealthy expire and by closing corporate loopholes.
Officials said the plan would ensure the US’ fiscal future and permit continued investment in education, new-generation energy and job creation.
“The president will make clear he is not going to support any plan that asks everything of some Americans and nothing of others,” a senior Obama administration official said on condition of anonymity. “He will say he will veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and the biggest corporations to pay their share.”
Specifically, Obama was to lay out a plan for tax revenue raises and spending cuts, which he was to suggest a congressional supercommittee charged with coming up with up to US$1.5 trillion in spending cuts should adopt.
Obama’s proposals would bring total deficit cutting plans over the next decade to US$4.4 trillion, officials said.
That topline figure includes US$1.2 trillion in cuts in federal discretionary spending already agreed by Obama last month as part of a compromise, which ended a standoff with Republicans over raising the federal debt ceiling.
It includes US$580 billion in spending cuts across all mandatory spending programs and US$1.1 trillion of savings realized from drawing down US troop numbers in Afghanistan and Iraq.
Tax reform would result in US$1.5 trillion in savings and a further US$430 billion would be found in additional interest savings elsewhere.
Included in the spending cuts are the US$248 billion in savings from Medicare programs for the elderly and US$72 billion in cuts from the Medicaid service for the poor, officials said.
The tax portion includes US$800 billion that would be saved by letting former US president George W. Bush’s administration tax cuts on individuals earning more than US$200,000 a year expire, a provision that will be fiercely fought by Republicans.
The plan would also include a new tax on those earning US$1 million or more, to ensure they pay taxes at a similar rate to lower earners.
The plan would be called the “Buffett Rule,” a reference to an objection by billionaire investor Warren Buffett that the richest Americans generally pay a smaller share of their income in federal taxes than middle-income workers.
Some millionaires enjoy the lower rate because investment profits — such as capital gains, dividends and “carried interest” compensation paid to investment managers and hedge fund partners — are taxed at a lower rate than wages.
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