Before sending his deficit-cutting proposal to Congress, President Obama attached a note in a speech in the Rose Garden: “This is not class warfare, this is math.” Below, National Journal does the math—and previews the political warfare that may ensue.
Already Paid For: Of the $4.4 trillion Obama’s plan shaves from the national debt, $1.2 trillion was already accounted for in the Budget Control Act the president signed in August to prevent a default, according to the White House. The remaining amount includes a $1.1 trillion decrease in defense spending—also previously expected in the execution of the plan to draw down troops in Afghanistan and transition control in Iraq.
The Buffett Rule: Warren Buffett has often criticized the nation’s tax system for letting him to pay a lower percentage in taxes than his secretary (and others in his office). How could this happen? According to Treasury Secretary Timothy Geithner, individuals who earn most of their income off dividends often pay lower rates than their middle-class peers. Under the so-called Buffett rule, which seeks to put an end to that, no American making over $1 million annually would pay less than the average middle-class family.
Veto Threat: Throwing a punch back at House Speaker John Boehner’s threat to block any bill proposing a tax increase, the president said he would not sign a bill “if it cuts benefits that people are relying on for Medicare and it doesn’t balance in revenue.”
The (Very Slight) Cut in Medicare: While the president criticized those who support cutting payments to beneficiaries, he did not leave Medicare completely off the table. Obama’s proposal includes a $248 billion cut in Medicare, but the White House says that most of it—$224 billion—will come from reducing overpayments. Off the table, for now anyway, is raising Medicare’s eligibility age.