Obama: End tax cuts for the wealthy – CNN

President Barack Obama unveils his plan to reduce the nation’s deficit Wednesday on CNN, CNN.com/Live or the CNN apps for the iPhone and iPad.

Washington (CNN) — President Barack Obama unveiled his long-awaited deficit reduction plan Wednesday, calling for a mix of spending reductions and tax hikes that the White House claims would cut federal deficits by $4 trillion over the next 12 years without gutting popular programs such as Medicare and Medicaid.

Obama’s plan includes a repeal of the Bush-era tax cuts on families making more than $250,000 annually — something the president has repeatedly called for in the past. It also calls for the creation of a “debt failsafe” trigger that would impose automatic across-the-board spending cuts and tax changes starting in 2014 if annual deficits are on track to exceed 2.8% of the nation’s gross domestic product.

The president claimed that by building on reforms in his health care overhaul, $480 billion would be saved by 2023, followed by an additional $1 trillion in the following decade. Growth in Medicare costs would be tightly constrained starting in 2018.

“We can solve this problem,” Obama said in a speech at George Washington University. “We came together as Democrats and Republicans to meet this challenge before, and we can do it again.”

“Any serious plan to tackle our deficit will require us to put everything on the table, and take on excess spending wherever it exists in the budget,” the president said. “A serious plan doesn’t require us to balance our budget overnight … but it does require tough decisions and support from leaders in both parties.”

“Above all, it will require us to choose a vision of the America we want to see five and 10 and 20 years down the road,” he said.

The administration’s package stands in sharp contrast to the blueprint outlined by House Republicans last week. The GOP agenda calls for cutting the debt by $4.4 trillion over the next decade while radically overhauling Medicare and Medicaid and dropping the top personal and corporate tax rate to 25%.

Under the Obama plan, Pentagon spending would fall by roughly $400 billion by 2023, while federal pensions, agricultural subsidies and other domestic programs would also face the budget ax, according to the White House.

In total, nonsecurity discretionary spending — Washington jargon for domestic programs aside from the big entitlements such as Medicare, Medicaid, and Social Security — would be cut by a total of $770 billion over the next 12 years.

The $770 billion figure is in line with recommendations put forward by Obama’s bipartisan debt reduction commission last December, the White House claims.

Social Security is not addressed by Obama’s plan. The president does not believe that the program “is in crisis (or) is a driver of our near-term deficit problems,” a White House statement noted.

But it does face “long-term challenges that are better addressed sooner than later,” the statement added.

Obama’s plan calls for top leaders on Capitol Hill to designate eight congressmen and eight senators — equally split between the two parties — to participate in budget talks spearheaded by Vice President Joe Biden starting in early May.

“The goal of these negotiations is to agree on a legislative framework for comprehensive deficit reduction,” the statement said.

The president strongly opposes the proposed Medicare and Medicaid overhaul outlined recently by House Budget Committee Chairman Paul Ryan, R-Wisconsin.

Under Ryan’s plan, Medicare, a major contributor to spiraling federal deficits, would be overhauled starting in 2022. The government would no longer directly pay bills for senior citizens in the program. Instead, recipients would choose a plan from a list of private providers, which the federal government would subsidize.

Individuals currently 55 or older would not be affected by the changes.

Medicaid, which provides health care for the disabled and the poor, would be transformed into a series of block grants to the states.

Republicans believe state governments would spend the money more efficiently and would benefit from increased flexibility. Democrats warn that such a move would shred the economic security most Americans have come to expect in recent generations.

Obama’s approach to debt reduction seeks to carve out a political middle ground between conservatives — who are pushing for deficit reduction based solely on spending cuts and expected economic growth — and liberals, who are generally resisting entitlement reform and seeking higher corporate and personal taxes.

GOP leaders, who were briefed by Obama at the White House before his blueprint was officially released, blasted the president’s call for higher taxes on those making more than $250,000.

“We can’t tax the very people we expect to reinvest in our economy and create jobs,” House Speaker John Boehner, R-Ohio, told reporters. “Washington has a spending problem, not a revenue problem.”

As Obama and the Republicans spar over long-term deficit reduction plans, they also need to tackle the budget for the remainder of the current fiscal year, which ends September 30.

The House is scheduled to vote Thursday on a deal reached late last week that would cut spending for the year by $38.5 billion.

The package cuts funding for a wide range of domestic programs and services, including high-speed rail, emergency first responders and the National Endowment for the Arts.

Under the terms of the deal, roughly $20 billion would be taken from discretionary programs while nearly $18 billion would come from what are known as “changes in mandatory programs,” or CHIMPS, which involve programs funded for multiyear blocks that don’t require annual spending approval by Congress.

Republicans generally opposed CHIMP cuts because they affect only one year, with funding returning to the preauthorized level in the following year.

Democrats and Republicans also have to contend with an impending vote to raise the nation’s debt ceiling. Congress needs to raise the limit before the federal government reaches its legal borrowing limit of $14.29 trillion later this spring or risk a default that could result in a crashing dollar and spiraling interest rates, among other things.

Republicans have repeatedly stressed that any vote to raise the cap has to be tied to another round of spending cuts or fiscal reforms.

The administration, in contrast, has called for a “clean” vote on the cap, which would raise the limit without adding any conditions. White House Press Secretary Jay Carney has warned that trying to force the issue is tantamount to playing a game of “chicken” with the economy.

While meeting with reporters after his meeting with Obama, however, Boehner indicated that the president might be open to a compromise on that vote.

“It’s time to act,” said Senate Minority Leader Mitch McConnell, R-Kentucky. Other countries “want to know whether America’s going to get its act together or (if it’s) going to become another Greece.”

Greece, after years of running massive budget deficits, was recently forced to confront an imminent economic meltdown by implementing severe austerity measures.

CNN’s Tom Cohen and Dan Lothian contributed to this report