Obama Deficit Plan: Raise Taxes, Cut Spending
President Obama announced a sweeping $3+ trillion, ten-year deficit reduction plan today, comprised of tax increases for the wealthy; an overhaul of the corporate tax code; and changes to Medicare and Medicaid. The plan will be submitted to the congressional "super-committee," which was formed out of the debt ceiling agreement. That committee must create a deficit reduction plan by November 23rd, which then must be approved by Congress by December 23rd. If not, $1.2 trillion in cuts in defense and entitlement programs would automatically occur in January 2013.
The new Obama plan breaks down into $1.5 trillion of tax increases (to take effect 2013) and the balance in spending cuts/savings:
- Expiration of Bush tax cuts for families making more than $250,000 and individuals earning more than $200,000 ($800B)
- Limitation of itemized deductions for families making more than $250,000
- Millionaire's Tax (the so-called "Buffett Rule" contains few details, but is likely to impose a minimum tax rate for households that earn more than $1 million in annual income, including both earned income and investment income in the form of interest income and capital gains)
- Overhaul Corporate Tax Code: Lower tax rates with new limits on deductions
- Ending tax breaks for oil companies, corporate jet owners and investment managers
- Entitlement Cuts (total of $580B, including reducing payments to providers and limiting benefits to wealthier Americans for Medicare ($248B) and Medicaid ($72B)
- Interest Savings from lower rates on the national debt ($430B)
- Savings from ending the Iraq and Afghanistan wars ($1.1T)
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