President Vows to Veto Deficit Reduction Without Tax Increase

The President's plan counts on recouping a full half of the $3 trillion in tax increases The biggest story surrounding the President's new plan to cut the deficit is his threat to veto any plan that does not include tax increases, and the Congressional Republicans' cry of class warfare in the face of such tax increases on corporations and the wealthy. By taking a hard line in favor of a "balanced approach" to cutting the deficit, (stimulus now and fiscal retrenchment later), the President is placating members of his own party who feel he has deserted Democratic ideals and has been weak in the face of Republican opposition. The proposal outlines a combination of entitlement cuts, tax increases and war savings to reduce the federal deficit by more than $3 trillion over the next 10 years. But with $1.5 trillion designated to come from tax increases alone, the President has threatened to veto any approach that omits tax reform and relies solely on spending reductions to address the fiscal shortfall. This stance is summarised in one sentence from the pre-released White House fact sheet that had Congressional Republicans up in arms on Sunday: The President will veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share. This approach signals a turnaround in negotiation strategy after attempts to reach a grand bargain on deficit reduction with Speaker Boehner failed earlier this year. The administration is now entering renewed discussions with the same kind of tough position that Republicans adopted during the prior debate. Where will the President find $1.5 trillion in tax increases? It will be a combination of letting the Bush tax cuts expire on wealthier taxpayers, limiting the value of deductions taken by high earners, and closing corporate loopholes. "Hedge fund managers," Obama said in the speech on Monday, should pay the same tax rates as "plumbers and teachers." But aside from ending the Bush-era tax cuts, designed to to be temporary in their inception, what the rest of the plan means exactly is as yet unclear. What is certain, however, is that any talk of tax increases puts the President on a collision course with House speaker Boehner, who said last week that he would not support any revenue increases in the form of higher taxes. When everything ends in gridlock, it will be up to the joint House-Senate committee to propose a bi-partisan solution by November 23. Congress will then have until December 23 to enact the plan, or else draconian automatic cuts across government agencies could take effect a year later. Related articles Obama: I'll Veto A 'One-Sided Deal,' it's Time to 'Do What's Right' (npr.org) Obama Draws New Hard Line on Long-Term Debt Reduction (nytimes.com) Obama deficit reduction plan embraces progressives (politico.com) Republicans cry 'class warfare' over millionaire tax (google.com/hostednews) Obama announces debt plan built on taxes on rich (msnbc.msn.com) Obama's Deficit Plan: A Big Veto Promise (motherjones.com) House Speaker: No tax hikes for super committee (money.cnn.com) {lang: 'ar'}

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