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Shocker: Republicans Point to Holes in Obama Debt Plan Shocker: Republicans Point to Holes in Obama Debt Plan

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BUDGET

Shocker: Republicans Point to Holes in Obama Debt Plan

Democrats wax supportive of the president's tax ideas.

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House Speaker John Boehner, R-Ohio, is less than thrilled with the Obama deficit plan.(Mark Wilson/Getty Images)

President Obama's call for slashing another $3 trillion from the deficit over a decade through steps including $1.5 trillion in tax increases represents an attempt to frame the choice in the 2012 election, and Republicans signaled on Monday that they are game for that debate.

The GOP gave a quick thumbs-down to Obama’s call for closing corporate loopholes and raising taxes on millionaires, even as the plan seemed to energize liberals.

 

Obama will send his package of tax and other proposals to the new Joint Select Committee on Deficit Reduction to consider. He and other Democrats suggested the plan sets up a broader argument over the fairness of the tax system. Overall, the president’s plan—combined with the $1.2 trillion to $1.5 trillion in budgetary cuts that the new 12-member panel was already commissioned to find—would represent a total of $4.4 trillion in deficit reduction over 10 years.

But House Speaker John Boehner, R-Ohio, insists that raising taxes is not an option for the super committee.

“Pitting one group of Americans against another is not leadership,” 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.”

 

Added Senate Minority Leader Mitch McConnell, R-Ky., in a statement: “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.... The good news is that the Joint Committee is taking this issue far more seriously than the White House.”

Sen. Pat Toomey, R-Pa., who McConnell named to the panel charged with making a proposal before Thanksgiving, called Obama’s proposal a distraction from that effort.

“I am concerned that his deficit-reduction strategy sometimes seems more defined by political posturing, such as recycling tax hikes that even lawmakers in his own party have publicly opposed,” Toomey said. “With the Select Committee’s deadline looming, we do not have time to waste on political games and pushing big tax increases that will only make our economy weaker for all Americans. I remain firmly committed to working with my fellow members of the Select Committee to produce a proposal that reduces our deficits and encourages economic growth and job creation.”

But Sen. Patty Murray, D-Wash., co-chair of the deficit panel, said in a statement, “The president’s proposal is a serious approach to tackling the deficit and creating jobs, and it is certainly welcome as this committee works on a balanced and bipartisan plan that can pass through Congress and be signed into law by the president.”

 

And Obama’s proposals were encouraging to other Democrats—including some of his harsher critics—that will fight to cut the nation’s debt and create jobs with a formula that includes new tax revenues as well as spending cuts. The plan Obama outlined from the Rose Garden comes a week after he told Congress to pay for his $447 billion jobs plan by eliminating various tax benefits that wealth Americans enjoy.

The plan also proposes trimming mandatory programs, including Medicare. But Obama insisted he would veto any plan to cut Medicare benefits that doesn’t come with tax increases on the wealthy. His proposal wouldn’t alter Social Security or increase the Medicare eligibility age.

“By calling for reforms that will ensure that all Americans contribute their fair share, and by strengthening Medicare, the president is ensuring that we aren’t balancing our budget on the backs of the middle class and seniors,” said House Minority Leader Nancy Pelosi, D-Calif.

Sen. Chuck Schumer, D-N.Y., who heads Senate Democrats’ policy and messaging operation, said Obama “laid down a marker” and, through the so-called “Buffett rule,” offered a “sort of first principle” that will provide a strong argument for Democrats heading into 2012. Obama did not include the proposal in his formal plan. That rule is named after billionaire investor Warren Buffett, who said that wealthier Americans should not pay less in taxes than poorer Americans.

Schumer suggested Senate Democrats force a quick vote on that particular idea or the Obama proposal as a whole, though he conceded it faces slim odds of passing.

“Let’s grab the language, get it scored, put it on the floor, and have a vote,” he said, arguing that that move would force Republicans to “accept a balanced approach” or be exposed as defending the rich at the expense of the middle class.

Although many Senate Democrats fear the political fallout from voting to raise taxes, Schumer argued raising taxes on “the very-highest-income people” is politically popular and would win “virtually universal support” among Democrats.

Obama’s proposals won praise from Congress’s most liberal members and others who recently have been critical of the president for not taking a harder line in negotiations with Republicans.

“We applaud the president’s good-faith efforts to address the real drivers of our national deficit: tax breaks for wealthy elites, two wars, [and] giveaways to big corporations,” said Congressional Progressive Caucus co-chairs Reps. Raul M. Grijalva, D-Ariz., and Keith Ellison, D-Minn.

David Mintz, campaign director at MoveOn.org, said, that his group is “glad” to see the White House received the message that “Americans need jobs, not cuts, paid for by making millionaires and corporations pay their fair share.”

But Michael Tanner, a senior fellow at the Cato Institute, a libertarian think tank, was less enthused.

“What is especially disappointing about the president's proposal is not just his class warfare style call for higher taxes, but his complete abandonment of entitlement reform,” Tanner said. “The president has taken Social Security reform completely off the table, and the minor cuts he offers to Medicare and Medicaid do not make any fundamental structural reforms to the programs.”

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