President Barack Obama will lay out his plan for reducing the nation’s deficit Wednesday, belatedly entering a fight over the nation’s long-term financial future. But in addition to suggesting cutsâ€”the current focus of debateâ€”the White House looks set to aim its firepower on a more divisive topic: taxes.
In a speech Wednesday, Mr. Obama will propose cuts to entitlement programs, including Medicare and Medicaid, and changes to Social Security, a discussion he has largely left to Democrats and Republicans in Congress. He also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy.
“Every corner of the federal government has to be looked at here,” David Plouffe, a senior White House adviser, said Sunday in one of multiple television appearances. “Revenues are going to have to be part of this,” he said, referring to tax increases.
Until now, Mr. Obama has been largely absent from the raging debate over the long-term deficit. The White House has done little with the recommendations of its own bipartisan deficit commission. And Mr. Obama’s 2012 budget didn’t offer many new ideas for tackling entitlement spending, among the biggest long-term drains on the federal budget.
The president stayed out of the long-term deficit debate in an apparent effort to see whether Republicans would move first in offering long-term deficit-reduction ideasâ€”something House Budget Committee Chairman Paul Ryan did with an ambitious plan last week to trim spending now and in the future.
The White House move caught Democrats in Congress off guard, according to aides, and details of the president’s proposals were sketchy. Mr. Plouffe said the president will name a dollar amount for deficit reduction, although the White House would not provide specifics. Introducing taxes into the discussion has the potential to complicate the resolution of coming budget fights, specifically the need to raise the debt ceiling, a move needed to prevent the U.S. defaulting on its debt.
The administration’s push comes less than two days after Mr. Obama and congressional leaders reached a deal to fund the government for the next six months that would cut $39 billion in spending. Administration officials say they have long been working on a comprehensive plan to tackle the country’s debt, but waited so as not to complicate budget negotiations that almost shut down the government.
Rep. Eric Cantor of Virginia, the No. 2 Republican in the House, said in an interview that Mr. Obama had already passed up an opportunity to show seriousness about deficit reduction with his 2012 budget. “Instead of returning back to the age-old playbook of raising taxes so that spending can continue, I think maybe the White House ought to take a look at what we’re talking aboutâ€¦which is to cut spending as well as to reform these entitlement programs.”
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