Obama’s plan calls for a tax increase on the wealthy, a provision he failed to enact last December in his tax deal with the Republicans, plus other revenue increases achieved through tax reform.
“Some will argue we shouldn’t even consider raising taxes, even if only on the wealthiest Americans,” Obama said. “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.”
Obama's four-part plan
Obama laid out a four-part plan for deficit reduction:
- Cuts in nonsecurity discretionary spending, while still investing in energy innovation, education, and infrastructure. The level of his cuts would be consistent with the recommendations of his bipartisan fiscal commission, saving $770 billion from 2012 to 2023.
- Cuts in security spending deeper than those in his 2012 budget. Projected savings by 2023 are $400 billion.
- Cuts in spending on Medicare and Medicaid by making delivery of health services more efficient and cost-effective. Obama says he would slow the growth of Medicare by strengthening an independent commission of doctors, nurses, medical experts, and consumers, which recommends ways of reducing unnecessary spending. He also proposes to make Medicaid more “more flexible, efficient, and accountable.” Savings from both programs would add up to $500 billion by 2023, he says.
- Reforming the tax code in a way that closes loopholes, limits deductions, and allows tax rates to go down. Limiting itemized deductions for the wealthiest 2 percent of Americans would reduce the deficit by $320 billion over 10 years, Obama says. All told, his plan projects revenue from changes to the tax code at $1 trillion.
