Obama To Propose Revenue Increases To Fight Deficit

President Obama releases his plan to bring down the federal deficit on Monday. He will outline his plan to a congressional panel tasked with cutting more than $1 trillion in red ink.The proposal is expected to include new taxes, Medicare reductions and savings from troop withdrawals.

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President Obama steps into the White House Rose Garden later this morning, and he'll be taking on the prickly issue of budget deficits. The president will outline his recommendation to a special congressional committee that's charged with cutting more than a trillion dollars in red ink over the next decade. Some lawmakers, some budget watchdogs, want the committee to aim much higher than that. And as part of today's recommendation, Mr. Obama is expected to spell out a plan for a big increase in tax revenue.

NPR White House correspondent Scott Horsley joins us on the line with more. Hey, Scott.

SCOTT HORSLEY: Good to be with you, David.

GREENE: So $1.2 trillion in deficit reduction, and that's the minimum target for this committee. How big is the president likely to go this morning?

HORSLEY: He's aiming higher than that, David. He's going to propose deficit reduction north of $4 trillion; that includes the trillion in discretionary spending cuts that were agreed to earlier this summer. Now, part of this is politics. The White House has long argued that if you're going to go through the painful exercise of slaying sacred cows, you might as well go after the whole herd and not just target one or two.

But this is also about economics. The $1.2 trillion that the supercommittee has to find just doesn't really begin to address the nation's deficit problem. Standard & Poor's said earlier this summer that you need at least 4 trillion in deficit reduction. That's what most of the bipartisan groups have also come up with, and so that's where the president is headed.

GREENE: Well, as the president addresses this problem, the White House is saying that his vision is going to be balanced. What does that mean? I mean, is that a code for tax increases?

HORSLEY: It is. That's the expression he's used to say that you've got to attack the deficit not only on the spending side, but also on the revenue side. And he'll be calling for one and a half trillion dollars in additional tax revenue today. Most of that would come through higher taxes on the wealthy.

Now, this sets up a showdown with the GOP, which has time and time again this year, walked away from deficit-cutting negotiations out of a refusal to consider tax increases. And just last week, we had the Republican House speaker, John Boehner, again drawing that line, saying revenue increases should not be part of the recipe.

It's an article of faith with the GOP that higher tax revenue kills jobs. And I say article of faith because the evidence from the 1990s is that you can actually have very robust job growth with higher tax rates than we have right now right now.

GREENE: You mentioned higher taxes on the wealthy. And we heard over the weekend about one of the president's proposals, a higher tax on the really wealthy. He's actually naming it for billionaire investor Warren Buffett - the Buffett Rule. What is that, exactly?

HORSLEY: Yeah. Well, Warren Buffett made waves a few weeks ago when he said that Congress should stop coddling billionaires like him, and...

GREENE: Tax me more. Tax me more.

HORSLEY: Exactly. And he's complained before that he pays a lower tax rate, for example, than his secretary. Now, a lot of Warren Buffett's income comes in the form of dividends and capital gains, which we do tax at a lower rate than ordinary income. And so the president will call for changing that, at least when it comes to upper-income households.

GREENE: Well...

HORSLEY: And this makes for a sort of interesting debate about, you know, whether we should tax earnings on money at a different rate than we tax earnings on labor. But I have to say, David, this is a little bit like the corporate jet tax - it's sort of a populist window dressing. The fact of the matter is, there are just aren't enough Warren Buffetts out there to make a huge difference...

GREENE: To make a big difference. Well, wasn't there, a few months ago, talk of this grand bargain that would include both increased tax revenue but also significant savings on entitlement programs, like Medicare? I mean, what are the chances for such a grand bargain now?

HORSLEY: Well, it would be nice if they were good. And the president has shown a willingness to tackle Medicare, in the past. The proposal he's offering up today includes some $250 billion in Medicare savings, although he stopped short of calling for an increase in the eligibility age for Medicare.

Last week, we had some 36 senators come out and show support for something like a grand bargain. But of course, it takes more than that to pass anything. If the left digs in and says you can't touch Medicare, if the right digs in and says you can't raise taxes - well, then we're not going to get that kind of grand bargain. And it's going to be a very long and unproductive 14 months until the next election.

GREENE: All right. Well, I'll be watching that speech from the president later this morning.

That's NPR's White House correspondent Scott Horsley. Thank you, Scott.

HORSLEY: My pleasure.

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