US politics live blog – Monday 19 September 2011
US politics – with President Obama about to unveil his suggestions for reducing the US federal budget deficit.and welcome to our rolling coverage of
Here’s the Guardian’s coverage of Obama’s speech today:
Obama will unveil the new proposals on Monday at the White House and they will be submitted to a congressional “super-committee” that was created in August to draw up a deficit-reduction plan.
The president is also expected to propose nearly $250bn in cuts to spending on Medicare, the federal health care program that primarily benefits the elderly; $330bn in cuts to other mandatory benefit programs; and underline savings of $1tn from the withdrawal of troops from Iraq and Afghanistan.
The plans are said to include $1.5tn in tax increases aimed mainly at wealthy Americans and corporations, a “Buffett tax” aimed at those earning $1m or more a year and named after billionaire investor Warren Buffett who has repeatedly said that the wealthy such as himself are taxed too lightly.
Naturally the Republicans aren’t happy at the prospect of tax increases – setting the scene for another budget showdown in Washington.
New York Times sees the coming battle over the deficit reduction that is looming – with Republicans tagging the tax increase as “class warfare”:While we are waiting for President Obama to start speaking, here’s how the
Mr Obama’s proposal is certain to receive sharp criticism from Congressional Republicans, who on Sunday were already taking apart one element of the proposal that the administration let out early: the so-called Buffett Rule. The rule – named for the billionaire investor Warren Buffett, who has complained that he is taxed at a lower rate than his employees – calls for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers.
That proposal, which was disclosed on Saturday, was met with derision Sunday by Republican lawmakers, who said it amounted to “class warfare” and a political tactic intended to portray his opponents as indifferent to the hardships facing middle-class Americans.
Living Within Our Means and Investing in the Future – The President’s Plan for Economic Growth and Deficit Reduction, which includes these details:Buffett tax aside, what else is Obama proposing today? The White House has issued a fact sheet,
Paying for Our Investments and Reducing the Deficit
The plan produces approximately $4.4 trillion in deficit reduction net the cost of the American Jobs Act.
• $1.2 trillion from the discretionary cuts enacted in the Budget Control Act.
• $580 billion in cuts and reforms to a wide range of mandatory programs;
• $1.1 trillion from the drawdown of troops in Afghanistan and transition from a military to a civilian-led mission in Iraq
• $1.5 trillion from tax reform
• $430 billion in additional interest savings
To spur economic growth and job creation, the plan includes one-time investment and relief in the American Jobs Act. That adds to the deficit in 2012 but is fully paid for over 10 years, and deficit reduction phases in starting in 2013, as the economy grows stronger.
Deficit reduction is achieved in a balanced approach, with a spending cut to revenue ratio for the entire plan (including discretionary cuts) of 2 to 1.
Deficits and Debt
The Joint Committee plan significantly reduces deficits and puts the country on a fiscally sustainable path by 2017.
• The deficit is projected to fall to 2.3 percent of GDP in 2021. By comparison, if we did nothing, the deficit would be 5.5 percent of GDP in 2021.
• Reaches “primary balance”– where our current spending is no longer adding to our debt – in 2017. At that point, current spending is no longer adding to our debt, debt is falling as a share of the economy, and deficits are at a sustainable level.
The President’s plan would reduce the national debt as a share of economy.
• Stable or falling debt as a share of the economy is a key metric of fiscal sustainability.
• If we did nothing, the national debt would rise to 90.7 percent of GDP in 2021. By contrast, under the President’s plan, the national debt would fall to 73.0 percent of GDP in 2021 – or an improvement of almost 18 percentage points.
Obama should be speaking shortly, but to get a handle on the numbers being talked about here’s a rough guide to the main areas for the perplexed.
Obama’s plan aims to cut the deficit by $3tn over 10 years, made up mainly of:
Tax increases – $1.5tn made up of allowing the Bush tax cuts to expire ($866bn) limits on deductions $410bn, closing loopholes $300bn.
Spending cuts – bulk of cuts coming from ending military operations in Iraq and Afghanistan ($1.1tn), and savings on interest payments ($430bn).
Obama is running late (as usual), which means CNN’s Gloria Borger – America’s worst political commentator – gets to discuss the length of a piece of string.
Meanwhile, my colleague Dominic Rushe forwards reaction from the Tea Party Nation:
Today, Obama is supposed announce the so-called “Buffett Rule.” The Buffett Rule is not named after Jimmy Buffett. The rule would make more sense if the White House economic staffers have had large numbers of Margaritas first. It would probably make even more sense if the Obama regime were drunk when they came up with this idiotic idea.
The “Jimmy Buffett rule” would however involve hefty taxes on cheeseburgers eaten in paradise, and increased duty on salt.
Obama now speaking – and if you refresh this page (perhaps by offering it a drink of water) you will see live streaming video from the White House above.
Obama is bringing up the deficit reduction fight last time, saying he offered a grand bargain. “Unfortunately, the Speaker walked away from that plan.” He says that his plan today makes $2 of spending cuts for each $1 in new revenue.
Sadly, Obama has so far failed to recognise that it is International Talk Like A Pirate Day.
“All these reductions in spending will not solve our fiscal problems. We can’t just cut our way out of this hole,” says Obama, who obviously didn’t watch last week’s Republican candidates debate, several of whom declared that trimming fraud and waste would do the trick.
After all the talk about cuts, Obama wants to reassure on healthcare spending:
We will reform Medicare and Medicaid but we will not abandon the fundamental commitment that this country has kept for generations.
Otherwise, the main message so far is that Speaker of the House, John Boehner, is History’s Greatest Monster.
“Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett,” says Obama, now going after Republicans who sign pre-election pledges spurning tax increases under any circumstances:
Explain why someone making $50m a year in the financial markets should pay 15%, when a teacher making $50,000 a year is paying a higher rate. They should explain that.
The big question here is: who is Warren Buffett’s secretary?
“Those who have done well, including me, should pay our fair share,” says Obama.
Both sides agree that deficit reduction of $4tn is needed – but that the opposition won’t share the burden and pay their fare share. “This is not class warfare. It’s math,” says Obama, getting a brief laugh.
“It’s always more popular to promise the moon and leave the bill until after the next election or the one after,” says Obama, now quoting George Washington on the need for taxes, however unpleasant they might be.
Winding up, Obama says: “We know what’s right. It’s time to do what’s right.”
Just 19 minutes long, and stern, serious stuff. The Republicans will now line up to mock it.
full PDF version of the White House’s deficit reduction plan for all you budget geeks out there. It’s a mere 80 pages long.Here’s the
US Treasury Secretary Tim Geithner is now speaking live from the White House briefing room. If anyone can makes defeicits and taxes sound even more dull, it’s Tim Geithner.
At least I think Geithner is speaking live, it’s always hard to tell.
Discussing Obama’s plan, Tim Geithner’s ringing peroration is: “We think it’s better than the alternatives.”
Geithner’s dull monotone, immobile face and emotional gamut running from A to B makes him ideally suited to winning over public opinion in a dynamic political debate.
What to make of Obama’s speech today? The details of the deficit reduction are one thing, and the make-up of the cuts and revenue increases are not particularly surprising. What is more novel is Obama’s pledge to veto any deficit proposal that does not include tax increases while cutting spending on Medicare:
I will not support any plan that puts all the burden for closing our deficit on ordinary Americans. And I will veto any bill that changes benefits for those who rely on Medicare but does not raise serious revenues by asking the wealthiest Americans and biggest corporations to pay their fair share.
The implication is that Obama supports cuts in Medicare and tax increases, so long as they are both included in the overall deficit reduction.
In his response, Republican House leader John Boehner says Obama “has not made a serious contribution” to the deficit reduction work of the congressional super committee:
Pitting one group of Americans against another is not leadership. The Joint Select Committee is engaged in serious work to tackle a serious problem: the debt crisis that is making it harder to get our economy growing and create more American jobs.
Unfortunately, the president has not made a serious contribution to its work today. This administration’s insistence on raising taxes on job creators and its reluctance to take the steps necessary to strengthen our entitlement programs are the reasons the president and I were not able to reach an agreement previously, and it is evident today that these barriers remain.
In his speech today, Obama blamed Boehner for walking away from an earlier “grand bargain”. So no love lost there.
reads Confidence Men, the controversial new book by Ron Suskind that details the inner-workings of the Obama White House:The New York Times’s ace book reviewer, Michiko Kakutani,
Mr Suskind – a Pulitzer Prize winner and former reporter at The Wall Street Journal – has a flair for taking material he’s harvested to create narratives with a novelistic sense of drama. With Mr Obama, who is depicted here as having lost the thread of his own story line, Mr Suskind supplies a story line of his own: that of “a brilliant amateur” whose early tenure in office was marked by drift, hesitancy and an inability “to translate his will into policy on the occasions when he could decide on a coherent path.”
But in an exciting development, the White House press secretary Jay Carney said during his briefing today that an entire passage in Suskind’s book seems to have been “lifted” from Wikipedia.
response to Obama’s deficit reduction plans, the right-wing Heritage Foundation has a helpful guide for billionaires like Warren Buffett who want to pay more tax:In its
President Obama proposes the “Buffett Rule” to make sure the rich pay their “fair share.” However, there is already a system in place for Mr. Buffett and all the other millionaires and billionaires to pay more without a new job-killing tax hike.
Here’s how. Warren and his rich pals can go to this website.
It’s a US Treasury website that explains: “Citizens who wish to make a general donation to the US government may send contributions to a specific account called “Gifts to the United States.” This account was established in 1843 to accept gifts, such as bequests, from individuals wishing to express their patriotism to the United States.”
Obama plan includes $740 million in higher user fee charges for companies to register new pesticides
Interesting fact from Obama’s proposals today: one proposal is for a chage in the law to allow the government to contact people on their cell phones over outstanding federal debts (such as tax, presumably).
Here it is on page 28 of the full document:
Allow agencies to contact delinquent debtors via their cellular phones
The Administration also proposes to amend the Communications Act of 1934 to facilitate collection of debts owed to or guaranteed by the Federal Government, by facilitating contact of delinquent debtors who are most readily reached on their cell phones. This provision is expected to provide substantial increases in collections, particularly as an increasing share of households no longer have landlines and rely instead on cell phones.
HBO is also repeating the documentary at the more reasonable hour of 8pm ET tomorrow.
Senate Republican leader Mitch McConnell is not happy with Obama’s defitic reduction plan:
Veto threats, a massive tax hike, phantom savings, and punting on entitlement reform is not a recipe for economic or job growth – or even meaningful deficit reduction. The good news is that the Joint Committee is taking this issue far more seriously than the White House.
I think we can take that as a “no”.
It’s a quiet day on the Republican campaign trail – a quiet few days, in fact, as the candidates prepare for another debate on Thursday night in Florida.
Tonight, Rick Perry attends fund-raiser hosted by Hank Greenberg. That’s right: Hank Greenberg, the former chief executive of insurance giant AIG who did such a great job that AIG ended up being bailed out by the Bush administration in 2008 for an eventual $180bn.
Mitt Romney is holding a faundraising event in Georgia, with a $1,000-a head dinner in Atlanta.
Meanwhile, Michele Bachmann today appeared at an employee roundtable at a company named Sukup Manufacturing.
new opinion poll on the Republican race from USA Today and Gallup shows Rick Perry still in the lead, Mitt Romney doing better, and Michele Bachmann fading away.A
The headline gives Perry 31%, Romney 24%, Ron Paul 13%, and Bachmann, Newt Gingrich and Herman Cain on 5% apiece. More importantly, among self-identified Republicans (the only group that really matters in a Republican primary), Perry beats Romney in a head-to-head match-up by 49% to 39%.
We can tastsefully draw the curtain on Michele Bachmann’s 2012 presidential hopes. Not only is she now polling in margin-of-error territory but her former campaign manager Ed Rollins is sticking the knife in.
She doesn’t have the ability or the resources to go beyond Iowa at this point in time.
Once again, McMahon will try and use her vast personal wealth to win the Republican primary against a stronger Republican candidate, in this case Chris Shays, and risk losing to the Democrats in the battle for Joe Lieberman’s seat.
After all, in 2010 McMahon couldn’t beat a struggling Democratic candidate in the middle of a huge national swing to Republicans. Is she going to do better in a presidential election year, in traditionally Democratic-voting Connecticut?
The Associated Press reports:
In a statement released Monday, the Republican said she plans to kick off her campaign Tuesday in Southington at a business that designs and manufactures custom-built coil processing machines.
The former chief executive of World Wrestling Entertainment ran against former Democratic Attorney General Richard Blumenthal in 2010, but lost after spending about $50 million of her own money on the race.
Apparently, Democratic congressman Charlie Rangel has gate-crashed Rick Perry’s event at a restaurant in Washington Heights, New York City. It’s in his district.
Richard Wolff punctures the “class war” rhetoric of Republicans over Obama’s deficit proposals today:Over on Cif America,
The charge of class war is particularly obtuse. Consider simply these two facts. First, at the end of the second world war, for every dollar Washington raised in taxes on individuals, it raised $1.50 in taxes on business profits. Today, that ratio is very different: for every dollar Washington gets in taxes on individuals, it takes 25 cents in taxes on business. In short, the last half century has seen a massive shift of the burden of federal taxation off business and onto individuals.
Second, across those 50 years, the actual shift that occurred was the opposite of the much more modest reversal proposed this week by President Obama; over the same period, the federal income tax rate on the richest individuals fell from 91% to the current 35%. Yet, Republicans and conservatives use the term “class war” for what Obama proposes – and never for what the last five decades have accomplished in shifting the tax burden from the rich and corporations to the working class.
reading the fine-print of Obama’s deficit reduction plan so you don’t have to, all 80 pages of it.Congressional reporter Jamie Dupree has been
Among the details is reform of the US postal service aimed to save $18.5bn – part of which comes from dropping one day of postal delivery, presumably Saturday, and increases in the price of a stamp.
latest polling from Gallup, his support among liberal voters is stuck at 68%.Let’s end today’s coverage with the grim news for Obama that, according to the