Vision Collision

As the national political debate over the federal budget moves toward a historic showdown, President Obama calls for the wealthiest to pay more. The leader of Congressional Republicans says it’s a “non-starter.”

In a speech at George Washington University earlier today, President Barack Obama laid out his strategy for addressing the federal government’s mounting  budget deficits. As expected, the President’s outline is in stark contrast to one offered last week by Congressman Paul Ryan of Wisconsin, the Republican Chairman of the House Budget Committee.

The President at George Washington University earlier today (White House photo)

“There will be those who vigorously disagree with my approach,” the President said, taking direct aim at arguments from Rep. Ryan and others that spending cuts, alone, should be used to dramatically reduce federal budget deficits. “Some will argue we should not even consider ever — ever — raising taxes, even if only on the wealthiest Americans.  It’s just an article of faith to them.  I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more.  I don’t need another tax cut.  Warren Buffett doesn’t need another tax cut.  Not if we have to pay for it by making seniors pay more for Medicare.  Or by cutting kids from Head Start.  Or by taking away college scholarships that I wouldn’t be here without and that some of you would not be here without. And here’s the thing:  I believe that most wealthy Americans would agree with me.  They want to give back to their country, a country that’s done so much for them.  It’s just Washington hasn’t asked them to.”

The President’s speech brought a swift and negative response from Republican Speaker of the House John Boehner.

“To reduce the economic uncertainty hanging over American job creators,” Boehner said in a statement released this afternoon, “we must demonstrate that we’re willing to take action. And any plan that starts with job-destroying tax hikes is a non-starter. We need to grow our economy – not our government – by creating a better environment for private sector job growth. That’s why Republicans are fighting for meaningful spending cuts and fighting against any tax increases on American small businesses.”

Before he addressed his position on tax increases, Obama walked through the spending cuts he is proposing and how they would preserve the basic construct of the modern American social safety net, including Medicare, Medicaid and Social Security. He said he would vigorously oppose one of the key features of Rep. Ryan’s plan which is to restrict eligibility to Medicare to people who are now 55 and older, so that those who become eligible for the program after 2022 would go into what Rep. Ryan calls a “premium support model.” The model calls for a cap on the amount that a recipient would receive and those sums would be paid directly to an insurance provider selected by the recipient. According to USA Today, Rep. Ryan’s plan “would end up costing beneficiaries more money and give them less in service.” Rep. Ryan asserts it will end the “blank-check nature of the Medicare subsidy.”

In his speech today, the President sharply attacked the Ryan proposals on Medicare and Medicaid.

“This vision [Rep. Ryan’s plan] is less about reducing the deficit than it is about changing the basic social compact in America,” President Obama said. “Ronald Reagan’s own budget director said, there’s nothing ‘serious’ or “courageous” about this plan.  There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires.  And I don’t think there’s anything courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill.  That’s not a vision of the America I know.”

In talking about his proposed tax increases on the wealthiest Americans, the President revisited his widely-criticized decision just a few months ago to extend the George W. Bush-era tax cuts for the wealthiest for another two years.

“In December,” he said, “I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans.  But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society.  We can’t afford it.  And I refuse to renew them again.”
The President’s speech, though well-received by most Congressional Democrats, did have some pointed and substantive criticism from the liberal side of the political spectrum.

Robert Greenstein, the President of the Center on Budget and Policy Priorities, noted that although the Obama plan is in sharp contrast to Rep. Ryan’s it “goes dangerously far” in its calls for $360 billion in cuts in mandatory programs other than Medicare, Medicaid, and Social Security.

One of the things Greenstein points out is that a bipartisan commission last year headed up by former Republican Senator Pete Domenici and former Clinton Administration budget officer Alice Rivlin recommended a 50-50 approach between tax increases and budget cuts to restore the fiscal health of the federal budget. Yet, under the plan the President presented today, tax increases would account for only a third of the balancing act, leaving the remaining two thirds to be chopped from existing programs.

—Tim Connor