President Obama will relaunch his push to raise taxes on the wealthiest Americans Wednesday, using a speech on deficit reduction to create a litmus test for Republicans who have refused to embrace tax increases as part of the formula for reducing runaway budget shortfalls. There is little political appetite for higher taxes of any kind in Washington. But Obama will again propose eliminating tax breaks for households earning more than $250,000 a year, banking that a proposal Republicans rejected in December will now carry more weight in light of the intense focus on bringing down the deficit.
Congressional Republicans, however, say they will block any attempt to raise taxes and rely instead on deeper budget cuts.
“If the president begins the discussion by saying we must increase taxes on the American people — as his budget does — my response will be clear: Tax increases are unacceptable and are a nonstarter,” House Speaker John Boehner, R-Ohio, said Tuesday.
The schism will likely snowball into a campaign issue in a fast-approaching election season and force Republicans to defend historically low tax rates for the nation’s wealthiest individuals and corporations after nearly shutting down the government in a dispute over soaring budget deficits.
The administration will argue Obama’s tax plan demonstrates a commitment to reducing red ink while not taking a meat cleaver to entitlement programs for seniors and the poor.
Republicans laid down a marker in the entitlement debate, though, with a proposal from House Budget Committee Chairman Paul Ryan, R-Wis., to slash more than $5 trillion in spending over the next decade, almost entirely through spending cuts. Ryan’s plan would actually cut tax rates for corporations and high-income Americans.
Some analysts argue that Obama’s plan to raise taxes on the wealthy will do little or nothing to reduce government debt.
“The push is wrongheaded from a political and policy point of view,” said former Congressional Budget Office Director Douglas Holtz-Eakin. “His own commission has said the problem is spending. There is not enough money there. Anybody serious about our budget problem knows that.”
Obama’s deficit commission, headed by Democrat Erskine Bowles and Republican Alan Simpson, called for slashing $4 trillion from budget deficits over the coming decade — though a third of that reduction would come through increased taxes.
White House spokesman Jay Carney dismissed as speculation reports that Obama would essentially adopt the commission’s recommendations, and he refused to say whether the president would use his budget speech on Wednesday to outline a broad framework and leave it to lawmakers to hammer out a final deal.
However, Carney made it clear that Obama’s blueprint would provide a striking contrast to the plan put forward by Ryan in that the president was willing to “take on the sacred cows” in his own party.
“What is not acceptable is a plan that achieves serious deficit reduction only by asking for sacrifice from the middle class, seniors, disabled and the poor while providing substantial tax cuts to the very well off,” Carney said.
Any effective approach, Carney said, must include “all three legs of the stool” — entitlements, taxes and defense spending.
