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Obama outlines deficit plan, rejects ‘class warfare’ claim

WASHINGTON ó Over the summer President Barack Obama pushed a “grand bargain” that called on Republicans and Democrats to forge a compromise: each would agree to painful sacrifices that would slash the nation’s deficit and shore up the social safety net for decades. PHOTO: U.S. President Barack Obama makes a statement about his proposed federal defict reduction plan, in the Rose Garden at the White House September 19, 2011 in Washington, DC. |By Peter Nicholas and Lisa Mascaro, Tribune Washington Bureau

WASHINGTON ó Over the summer President Barack Obama pushed a “grand bargain” that called on Republicans and Democrats to forge a compromise: each would agree to painful sacrifices that would slash the nation’s deficit and shore up the social safety net for decades.

The approach failed to achieve a deal, angered many Democrats and coincided with a steady drop in Obama’s prospects for re-election.
In releasing a new deficit-cutting plan Monday, Obama displayed a striking change in course. His shift in both substance and rhetoric amounted to a tacit admission that the strategy he had pursued from April through August had failed.

(PHOTO: U.S. President Barack Obama makes a statement about his proposed federal defict reduction plan, in the Rose Garden at the White House September 19, 2011 in Washington, DC.)

Gone was the effort to strike a deal with Republicans. Gone were the summertime proposals to consider raising the eligibility age for Medicare or to change the cost-of-living adjustments for Social Security. Gone, too, was the conciliatory language about finding common ground and challenging the orthodoxies of both parties.

In their place was a firm veto threat, changes in Medicare that would largely protect beneficiaries, a demand for higher taxes from the wealthy and a catchy slogan, the “Buffett Rule,” designed to convey Obama’s belief that people earning more than $1 million a year should not be able to pay a lower tax rate than middle-income households.

“It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million,” Obama said. “Anybody who says we can’t change the tax code to correct that, anyone who has signed some pledge to protect every single tax loophole so long as they live, they should be called out. They should have to defend that unfairness.”

The country faces a choice ó higher taxes on the wealthy or deep, painful spending cuts, he declared.
“This is not class warfare. It’s math,” Obama said.

Even late last week, the degree to which the White House would shift course remained unclear. Administration officials were still weighing possible cuts in Medicare benefits when they held a closed-door meeting last week with Senate Democrats, who argued strongly against that ó a message the White House apparently took to heart.

The 90-minute session went a long way toward shoring up Obama’s support from his allies on Capitol Hill even if they disagree with specific aspects of his proposals, as several key Democrats certainly will.

Republicans, meanwhile, rejected Obama’s proposals just minutes after he rolled his plan out in a Rose Garden speech.
House Speaker John Boehner, R-Ohio, said: “Pitting one group of Americans against another is not leadership.”

Sen. Mitch McConnell of Kentucky, the Republican leader, dismissed the proposal as a “massive tax hike, phantom savings.”

But those Republican rejections may not trouble the White House because Obama’s new proposal was designed less as a solution to the deficit problem than as a political argument to put before voters. It frames what Obama’s advisers hope will be a stark choice for Americans: a Democratic Party that seeks a mix of tax increases and spending cuts to pare the deficit vs. a GOP that has ruled out tax increases of any sort, even on millionaires.

“The president put down a marker today and he did it more forcefully than we have seen before,” Sen. Chuck Schumer, D-N.Y., told reporters after Obama’s speech, reflecting the Democratic hope. “It makes the Republican position almost indefensible.”

Despite his sagging position in the polls, Obama and his aides have some reason to believe their new approach could work. Most Americans tell pollsters they believe that those earning more than $250,000 a year should pay higher taxes to reduce the deficit. And a solid majority support the president’s call for ending the Bush-era tax cuts for the wealthiest families which, Obama reiterated again on Monday, were supposed to be temporary tax breaks.

“If Republicans want to go in a different direction from where the American people are, that is to their own political detriment,” said Bill Burton, a former White House aide and co-founder of the super-PAC Priorities USA Action.

Obama’s plan also could galvanize a Democratic Party that has been demoralized. A Bloomberg poll this month showed that 44 percent of Obama’s supporters like him as much as ever, but 48 percent said they either no longer support him or their enthusiasm has dissipated.

Democrats, some of whom were distancing themselves from Obama as recently as last week, rushed to compliment him Monday, with statements of support also coming from groups on the left that had been critical.

Moveon.org, for example, will air a 30-second TV ad this week touting Obama’s “Buffett Rule.” The spot urges people to call Congress and urge them to “raise taxes on millionaires and billionaires so all Americans pay their fair share.”

On Monday, Obama appeared ready for a showdown with Republicans, vowing to veto any bill that cuts entitlement programs without also including revenue increases. “We are not going to have a one-sided deal that hurts the folks who are most vulnerable,” Obama said.

Obama’s deficit proposal now goes to the congressional super committee, a group of six Democrats and six Republicans charged with cutting at least $1.5 trillion from federal deficits over the next 10 years. If the committee fails to come up with a proposal to send to Congress by Nov. 23, it will trigger automatic cuts to take effect in 2013, split between military and non-military spending.

Now that Obama has released his deficit proposal, he will quickly return to pushing the legislation that addresses the deepest of voter concerns: jobs. Obama’s re-election hinges more on the unemployment rate, currently at 9.1 percent nationally, than it does on debt levels.

Even as he unveiled his much-anticipated deficit reduction proposal, the president worked in a plug for his $447 billion jobs package, intended to boost hiring through a mix of federal spending to rebuild roads, bridges and schools; tax cuts for employers and consumers; and tax increases on the affluent.

“I’m ready to sign a bill,” he said. “I’ve got the pens all ready.”

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(Noam N. Levey in the Washington bureau contributed to this report.)
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©2011 Tribune Co.

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