Washington - US President Barack Obama on Monday
laid out a $3 trillion plan to cut US deficits by raising taxes on the rich,
but Republicans mocked it as a political stunt, signalling the proposal has
little chance of becoming law.
Vowing to veto any cuts to Medicare unless Congress hikes taxes on
companies and the wealthy, the Democratic president’s recommendations set the
stage for an ideological fight with Republicans that will stretch through
Election Day 2012.
“I will not support any plan that puts all the burden on closing
our deficit on ordinary Americans,” Obama said. “We are not going to have a
one-sided deal that hurts the folks who are most vulnerable.”
With polls showing most Americans unhappy with his economic
leadership, Obama’s re-election hopes could hinge on his ability to convince
voters that Republicans represent the rich, not the middle class. That was the
main theme of his remarks on Monday, in which he repeatedly said all Americans
must pay their “fair share” of taxes.
Republicans have consistently opposed any measures resembling tax
hikes, saying they will hurt the struggling U.S. economy by increasing the
burden on job-creating businesses.
“Veto threats, a massive tax hike, phantom savings, and punting on
entitlement reform is not a recipe for economic or job growth,” said Republican
Senate leader Mitch McConnell.
Obama’s speech underscored a more aggressive approach to defend
Democratic principles after two budget fights earlier this year in which he
ended up compromising with Republicans and suffering criticism for doing so from
his liberal base.
“This is purely politics, aimed at Obama’s demoralised base. It
undoubtedly has been poll-tested, so now Obama has a populist campaign issue.
There’s obviously no chance this could pass (on a vote in Congress),” said Greg
Valliere, chief political strategist at consultancy Potomac Research Group.
Obama’s plan proposes $3 trillion in savings over the next decade
with roughly half of those savings coming from higher tax revenues.
His recommendations will go to a congressional “super committee”
charged with finding deficit savings of at least $1.2 trillion by November 23.
Congress must then vote on the panel’s proposal by December 23 or automatic spending
cuts will be triggered across government agencies, beginning in 2013.
Investors want evidence that Washington’s political leaders are
capable of tackling the towering US deficit and the country’s mounting debts,
after ratings agency Standard & Poor’s cut the US AAA rating in August.
Agencies have threatened fresh action if Washington fails to produce a credible
plan for addressing long-term debt.
Obama’s plan does not raise the eligibility age for Medicare
recipients, something he proposed during debt ceiling negotiations with House
Speaker John Boehner over the summer.
Instead, he is proposing something more palatable to the left -
$248bn in Medicare savings, the bulk of which will come from reducing
overpayments to health care providers.
Medicare and Medicaid are viewed by analysts as the biggest
contributors to long-term US deficits, which voters see as a key issue in the
The US budget deficit in 2011 is expected to be about $1.3 trillion.