NEW YORK (CNNMoney) — President Obama unveiled a plan on Monday to cut the national debt by roughly $3 trillion over the next decade.
Obama’s plan reflects his vision for how best to put the country on a more fiscally sustainable course, so it is different in nature than the kind of legislative compromise he was trying to broker this summer during the debt-ceiling debate, a senior administration official said.
A driving principle behind the proposal is that high-income individuals and corporations should pay more in taxes than they do currently so that they will bear some of the burden of debt reduction going forward.
Indeed, in remarks on Monday morning, the president threatened to veto any debt-reduction legislation that cuts benefits and doesn’t include higher taxes on the wealthy. “I will not support any plan that puts all the burden on ordinary Americans,” he said.
Obama even introduced the “Buffett Rule” for millionaires — named after investor Warren Buffett, who has frequently argued that the very rich are not taxed enough.
The president’s debt reduction proposal is likely to placate — at least a little — those in his Democratic base who have been adamant that they want the rich to pay more and they don’t want Medicare or Social Security benefits hit.
The White House said last week the president’s plan will not include any Social Security reform proposals. And another senior administration official noted Sunday that the plan does not call for raising the Medicare eligibility age, which fiscal experts have recommended.
But the Obama plan has already drawn criticism from Republicans, who have been adamant about not wanting to raise anyone’s taxes
The plan Obama released includes some $3 trillion in savings on top of the nearly $1 trillion already signed into law under the debt ceiling deal enacted in August.
Of that, however, close to $500 billion would have to be used to pay for the American Jobs Act, which Obama proposed last week. And a third of the savings he proposes would come from expected war savings.
All told, the White House estimates the president’s plan would reduce debt to 73% of the size of the economy by 2021, well below the nearly 91% it’s on track to hit without any budgetary changes. It also estimates the annual deficit that year would fall to 2.3% of GDP, down from the 5.5% currently projected.
Initial response to the president’s plan from fiscal experts was decidedly mixed. The nonpartisan Committee for a Responsible Federal Budget praised it for some of its proposals, but criticized it for doing too little to control health care costs among other things.
