Obama lays out cuts, new taxes to tackle deficit

By Donovan Slack, Globe Staff

WASHINGTON – President Obama this morning laid out his vision for deficit reduction, calling for $1.5 trillion in new tax revenue and $583 billion in spending cuts during the next 10 years.

The president’s proposal would cut the deficit by $3 trillion overall, taking into account savings from troop draw-downs in Iraq and Afghanistan.

The new tax revenue would come from closing loopholes and ending subsidies for oil and gas companies, among others, and from instituting minimum tax rates for Americans who earn $1 million or more annually.

“This is not class warfare, it’s math,” Obama said in an address in the White House Rose Garden. ``We can’t just cut our way out of this hole. It’s going to take a balanced approach.”

The president’s proposal will go to the bipartisan congressional committee currently working to identify deficit cuts totaling $1.5 trillion. It identifies potential areas for those cuts and also ways to pay for Obama’s $447 billion jobs plan he introduced last week.

But both the jobs plan and the deficit-cutting proposal appear to have little chance of passing.

Senate Republican Leader Mitch McConnell immediately issued a statement shooting down the president’s plan.

“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,” he said.

Liberal groups, however, hailed it as a return to the principles of the Democratic party. “For months, hundreds of thousands of members of the American Dream Movement have been urging Washington to focus on creating jobs and making our tax system work for all Americans, not just the super rich,” said Daniel Mintz, Campaign Director at MoveOn.org. “Today, we’re glad to see this message reach the White House. Americans need jobs not cuts, paid for by making millionaires and corporations pay their fair share.”

Republicans already have flatly rejected any tax increases, with House Budget Chair Representative Paul Ryan characterizing the president’s call for minimum tax rates for millionaires “class warfare.

“Class warfare may make for really good politics but it makes for rotten economics,” Ryan, Republican of Wisconsin, said.

House Speaker John Boehner said Friday, “It’s a very simple equation: Tax increases destroy jobs.”

There were no signs of what the administration had negotiated and hailed as a grand bargain with Republicans earlier this summer – no changes to the social security cost of living calculations or eligibility age for Medicare.

The president singled out Boehner and Ryan during his address, saying their positions are indefensible. He said the speaker, while talking about eliminating the my-way-or-the-highway approach, said in effect, my way, or the highway.

Obama drew his own battle line, saying he would veto any bill that includes cuts to entitlement programs like Medicare but not tax increases to pay for them.

“It’s about whether we are in fact in this together and were looking out for one another,” he said. “We know what’s right. It’s time to do what’s right.”