President Obama lashed out at the Republican budget plan passed last week by the House and endorsed by Mitt Romney.
During an Associated Press luncheon in Washington, D.C. on Tuesday, Obama poked fun at Romney’s support for the budget plan introduced by House Budget Committee Chairman Paul Ryan, R-Wis.
“This isn’t a budget supported by some small rump group in the Republican Party,” he said. “This is now the party’s governing platform. This is what they’re running on. One of my potential opponents, Governor Romney, has said that he hoped a similar version of this plan from last year would be introduced as a bill on day one of his presidency. He said that he’s 'very supportive' of this new budget, and he even called it 'marvelous'—which is a word you don’t often hear when it comes to describing a budget. It’s a word you don’t often hear generally.”
The House passed Ryan’s budget plan mostly along party lines last week (see House Passes Paul Ryan Budget, Consolidating Tax Brackets). The Republican budget would lower the top tax rate for individuals and businesses from 35 to 25 percent, and consolidate tax brackets into just two brackets of 10 and 25 percent, while slashing the budget in areas such as health care reform and entitlements.
Obama noted that whoever gets elected in November will have to deal with massive economic problems.
“Whoever he may be, the next President will inherit an economy that is recovering, but not yet recovered, from the worst economic calamity since the Great Depression,” said Obama. “Too many Americans will still be looking for a job that pays enough to cover their bills or their mortgage. Too many citizens will still lack the sort of financial security that started slipping away years before this recession hit. A debt that has grown over the last decade, primarily as a result of two wars, two massive tax cuts, and an unprecedented financial crisis, will have to be paid down.”
Obama noted that he had cut taxes for small business owners 17 times during his administration, but he said that further tax cuts were not the answer to solving the budget problems.
“For much of the last century, we have been having the same argument with folks who keep peddling some version of trickle-down economics,” he said. “They keep telling us that if we’d convert more of our investments in education and research and health care into tax cuts —especially for the wealthy—our economy will grow stronger. They keep telling us that if we’d just strip away more regulations, and let businesses pollute more and treat workers and consumers with impunity, that somehow we’d all be better off. We’re told that when the wealthy become even wealthier, and corporations are allowed to maximize their profits by whatever means necessary, it’s good for America, and that their success will automatically translate into more jobs and prosperity for everybody else. That’s the theory.”
He pointed to the problems stemming from the Bush-era tax cuts, which are due to expire at the end of the year after they were extended in a deal his administration struck with Republicans in December 2010.
“At the beginning of the last decade, the wealthiest Americans received a huge tax cut in 2001 and another huge tax cut in 2003,” he said. “We were promised that these tax cuts would lead to faster job growth. They did not. The wealthy got wealthier; we would expect that. The income of the top 1 percent has grown by more than 275 percent over the last few decades, to an average of $1.3 million a year. But prosperity sure didn't trickle down.”
Obama argued that this is not a time for further tax cuts for the wealthy as proposed in the Ryan budget plan. “Maybe, just maybe, at a time of growing debt and widening inequality, we should hold off on giving the wealthiest Americans another round of big tax cuts,” he said. “Maybe when we know that most of today’s middle-class jobs require more than a high school degree, we shouldn’t gut education, or lay off thousands of teachers, or raise interest rates on college loans, or take away people’s financial aid.”
Obama acknowledged that the Ryan budget proposes to close tax loopholes as a way to pay for the tax cuts, but he pointed out that the tax loopholes still haven’t been identified.
“We’re told that these tax cuts will supposedly be paid for by closing loopholes and eliminating wasteful deductions,” he said. “But the Republicans in Congress refuse to list a single tax loophole they are willing to close. Not one. And by the way, there is no way to get even close to $4.6 trillion in savings without dramatically reducing all kinds of tax breaks that go to middle-class families—tax breaks for health care, tax breaks for retirement, tax breaks for homeownership.”
Obama compared his administration’s budget to the proposals in the deficit commission led by former Senator Alan Simpson and former White House chief of staff Erskine Bowles, in which there is a mixture of tax revenue and budget cuts. In contrast, he likened the Republican budget plan to “social Darwinism.”
“The bipartisan Simpson-Bowles commission that I created—which the Republicans originally were for until I was for it—that was about paying down the deficit,” he said. “And I didn’t agree with all the details. It proposed about $600 billion more in revenue and about $600 billion more in defense cuts than I proposed in my own budget. But Bowles-Simpson was a serious, honest, balanced effort between Democrats and Republicans to bring down the deficit. That’s why, although it differs in some ways, my budget takes a similarly balanced approach: cuts in discretionary spending, cuts in mandatory spending, increased revenue. This congressional Republican budget is something different altogether. It is a Trojan Horse. Disguised as deficit reduction plans, it is really an attempt to impose a radical vision on our country. It is thinly veiled social Darwinism. It is antithetical to our entire history as a land of opportunity and upward mobility for everybody who’s willing to work for it; a place where prosperity doesn’t trickle down from the top, but grows outward from the heart of the middle class. And by gutting the very things we need to grow an economy that’s built to last—education and training, research and development, our infrastructure—it is a prescription for decline.”
Obama admitted that some of the tax proposals in his budget, such as the Buffett Rule, which would require millionaires and billionaires to pay a minimum tax rate, may not raise all the needed tax revenue, but he argued they are a step in the right direction.
“In a few weeks, there will be a vote on what we’ve called the Buffett Rule,” he said. “Simple concept: If you make more than a million dollars a year annually, then you should pay at least the same percentage of your income in taxes as middle-class families do. On the other hand, if you make under $250,000 a year—like 98 percent of American families do—then your taxes shouldn’t go up. That’s the proposal. Now, you’ll hear some people point out that the Buffett Rule alone won’t raise enough revenue to solve our deficit problems. Maybe not, but it’s definitely a step in the right direction. And I intend to keep fighting for this kind of balance and fairness until the other side starts listening, because I believe this is what the American people want. I believe this is the best way to pay for the investments we need to grow our economy and strengthen the middle class. And by the way, I believe it’s the right thing to do.”
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