President Barack Obama proposed a sensible and specific $3 trillion deficit-reduction plan on Monday with a call for everyone to pay their fair share of the nation's tax burden. He seeks a balanced mix of targeted spending cuts, tax increases on the wealthy and reforming the loophole-ridden tax code. After months of letting Republicans define the public debate, the president is finding his voice and presenting a more balanced picture to a nation desperate for pragmatic solutions to creating jobs and reducing the federal deficit.
Fed up with the Republican promise to eschew any plan that increases revenue, the president promises to veto any congressional package that cuts programs such as Medicare without raising revenues from wealthy Americans and big corporations. It is a necessary threat given the onslaught of criticism by Republican congressional leaders who deride as "class warfare" Obama's so-called "Buffett Rule," establishing a minimum tax rate on people earning more than $1 million a year. Billionaire investor Warren Buffett recently complained that he pays a lower tax rate than his employees. Because capital gains are taxed at a lower rate than other earnings, the nation's wealthiest often pay lower tax rates than middle-class taxpayers. This is about bringing a modicum of fairness to a tax code skewed to benefit wealth.
"It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million," Obama said. "This is not class warfare. It's math."
The president also would let the Bush-era tax cuts lapse in 2013 for the nation's wealthiest taxpayers and close loopholes that rich individuals and big corporations use to avoid taxes. The president noted that the tax code is more than 10,000 pages and how much one pays "depends less on what you make and more on how well you can game the system." This is particularly true for many giant corporations that reap billions in profits yet pay little or no corporate income taxes.
On spending, Obama would make substantial cuts without stanching federal investment that spurs economic growth or slashing entitlement benefits. He would cut more than $1 trillion in military spending by reducing troops in Afghanistan and Iraq, reform farm subsidies, and find savings of $320 billion in Medicare and Medicaid, largely by reducing overpayments.
Republicans have been clamoring for specifics on deficit-cutting from the White House and predictably declared Obama's proposal dead on arrival in Congress. But Obama has now delivered on the details of his vision and redefined the public debate as the congressional bipartisan super committee begins its work on crafting a deficit-reduction plan. The president establishes the right priorities for the nation, and there is room to go further in making reasonable changes to Social Security, Medicare and Medicaid if Republicans would negotiate in good faith.
Obama's plan recognizes that long-term deficit-cutting is essential but not at the expense of investments in education, research, infrastructure, and the promises America has made to its poor and elderly. It asks those who have the most to pay their fair share. And it tells those who have been creatively avoiding taxes that those days should be over. Those are sensible goals that should appeal to Americans who are more interested in real solutions than antitax rhetoric.