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Obama’s Deficit Reduction Plan

President Obama lays out his deficit reduction plan. We’ll dig through the details and big picture.

President Barack Obama gestures while speaking in the Rose Garden of the White House in Washington, Monday, Sept. 19, 2011. (AP)

President Barack Obama gestures while speaking in the Rose Garden of the White House in Washington, Monday, Sept. 19, 2011. (AP)

No more Mr. Nice Guy in the White House Rose Garden yesterday, as President Obama laid out his own deficit reduction package. No more “grand bargain” talk. No more cool adult in the room while others scrapped over details.

This time the president was scrappy, combative, and clear in his framing: a fix will require more from Americans of wealth, he said. Spending cuts and more tax revenue, from the top.

Republicans raced to call it class warfare. The pundits said it won’t pass. But the markers are down now.

This hour On Point: debt, taxes and the Obama plan.

-Tom Ashbrook

Guests

John Harwood, chief Washington correspondent for CNBC.

David Osborne, a senior partner of The Public Strategies Group, he’s also the author of “The Price of Government: Getting the Results We Need in an Age of Permanent Fiscal Crisis.” He’s also the author of this recent op-ed in the Boston Globe.

Russ Roberts, J. Fish and Lillian F. Smith Professor of Economics Chair, Mercatus Center Professor of Economics, and author of “The Price of Everything: A Parable of Possibility and Prosperity.” He’s also the author of this recent op-ed in the Boston Globe.

Highlights

President Obama called for more than $3 trillion in deficit reduction this week, with much of that money coming from a tax increase for higher-income Americans. “Either we gut education and medical research or we’ve got to reform the tax code,” Obama said in a Rose Garden speech this week. He threatened to veto any bill that cuts benefits without raising taxes.

“The most important thing in the [President’s] plan is the politics,” CNBC chief Washington correspondent John Harwood told On Point. “The president, having tried and failed to negotiate a grand bargain with the House speaker over the summer, has decided that if he is going to make a deal with Congress it is going to be because he beats them over the head with public opinion.”

Critics of the president’s plan, like George Mason University economics professor Russ Roberts, claim that the proposal doesn’t go far enough to fix the country’s serious financial problems. “Three trillion dollars over ten years is not a big number,” said Roberts. “It would be easy to cut out $1.3 trillion per year and not punish poor people, children, and the elderly.”

David Osborne, a former senior advisor to Al Gore and an Obama backer, says that increasing taxes on the rich is a step in the right direction, but only a “small part of the solution.” “In my opinion, other people should be paying higher taxes too,” Osborne said. “If we want true economic health, we should go back to the tax rates of the 1990s.”

Caller Mark from Acton, Massachusetts “Our economic crunch right now is caused by fact that demand has basically dried up. There’s a good reason for that, and that’s because demand was always driven by the middle class and the middle class has gotten very poor. The U.S. is 64th in income inequality, right below Ivory Coast, Cameroon, and Iran. [more on that here] For the last 30 years, more than 80 percent of the total increase in American incomes went to the richest one percent. And they now take home almost a quarter of all income in the United States, which is why Warren Buffett says that there is class warfare alright, but it is the rich that’s making the war and they are winning. As you pointed out, President Obama wants the top earners to go back and pay about what they paid under Clinton at which point – I’d like to remind people – that unemployment was 3.9 percent. Now, I don’t think that’s class warfare.”

From Tom’s Reading List

New York Magazine “Obama’s strategy now is to keep the two things separate. Last week, he introduced a jobs plan to cut taxes and spend more on things like infrastructure. He introduced his plan to reduce the long-term deficit today.”

Politico “In a feisty appearance from the White House Rose Garden, Obama detailed a proposal that reads more like a blueprint for shoring up his restless Democratic base than a vehicle for reaching across the aisle in search of bipartisan compromise. His tone — incredulous, exasperated and firm — was a notable departure from his usual reluctance to go too hard after the Republicans whom he needs to pass bills through Congress.”

CBS News “Even before President Obama unveiled his $3 trillion proposal to cut the deficit with $1.5 trillion in tax hikes for the rich, Republicans on Capitol Hill were declaring it dead, with a key lawmaker labelling it “class warfare.””

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