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Obama's deficit proposal marks a move away from compromise

By calling for a millionaire's tax and threatening to veto any bill that doesn't address revenue as well as spending, Obama tacitly admits than his push for a 'grand bargain' with the GOP failed.

September 19, 2011|By Peter Nicholas and Lisa Mascaro, Washington Bureau
  • President Obama walks from the White House Rose Garden after discussing his plan to cut the deficit.
President Obama walks from the White House Rose Garden after discussing… (Jason Reed, Reuters )

Reporting from Washington — Over the summer President 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 reelection.

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.

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 — 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 with Senate Democrats, who argued strongly against that — 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 out his plan in a Rose Garden speech.

House Speaker John A. Boehner (R-Ohio) said, "Pitting one group of Americans against another is not leadership."

Sen. Mitch McConnell of Kentucky, the chamber's 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 the president's advisors 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 versus 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. Charles E. 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 George W. Bush-era tax cuts for the wealthiest families which, Obama reiterated 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 cofounder 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% of Obama's supporters like him as much as ever, but 48% said they either no longer supported him or their enthusiasm had 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 the Buffett rule, named for billionaire tax code critic and Obama supporter Warren Buffett. The spot urges people to call Congress and urge them to "raise taxes on millionaires and billionaires so all Americans pay their fair share."

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