19 Sep 2011

Obama unveils three trillion dollar deficit cuts

This is not class warfare – it’s math. President Obama unveils deficit cuts worth $3 trillion – including a new tax on millionaires.

It’s not an easy sell – but President Obama is trying to rally Democrats behind his budget cuts. The strategy – getting rid of tax breaks and loopholes and what’s being called the “Buffett rule”, echoing Warren Buffett’s call for millionaires to pay the same proportion of their income as tax than middle and working class Americans.

As he set out his plan in the White House Rose Garden this afternoon – he went straight for the Republican charge that he was deliberately stirring up class antagonism: “This isn’t class warfare, it’s math”, he declared. And he pledged to veto any cuts to Medicare which didn’t require corporations and wealthy Americans to pay their ‘fair share’. “We are not going to have a one-sided deal that hurts the folks that are the most vulnerable”, he said.

President Barack Obama

Tax on millionaires

Hence the Buffett rule, creating a minimum tax rate on all families making more than $1m a year – affecting only a small propotion of households, perhaps, but setting what aides described as a ‘standard of fairness’. There’ll be another tax bump for the wealthy too, when the Bush era tax cuts expire next year.

This isn’t class warfare – it’s math. Barack Obama

But while Obama might be going all out to woo his own grassroots, and rejecting the politics of compromise that has brought him so much grief, this is one $3 trillion cuts plan that is unlikely to win him many friends on the Republican side.

The plan comes on top of recommendations that Obama’s already made to the Congressional supercomittee, charged with finding more than a trillion dollars of new budget savings over the next decade – as well as plans to pay for last week’s jobs creation bill.

Class warfare might make for good politics, but it makes for bad economics. Paul Ryan, Budget Committee chairman

However, it’s almost certain to be thrown out by the Republicans judging from their initial response to proposals like the speech. Senate majority leader Mitch McConnell dismissed it thus: “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”.

Political warfare

If not class warfare, perhaps, this is certainly political warfare, and a realisation by Obama’s team that they seriously need to fire up their base. Forcing the Republicans to defend the super-wealthy and big corporations is one tactic, defending the entitlement programmes that Democrats hold so dear, is another. He’s already won some warm endorsement from former President Bill Clinton – and there’s been some high energy at a series of rallies to promote the jobs plan, with cries of “Pass this Bill” from enthusiastic crowds.

And yet… there are ominous soundings of caution, despair even, among the political chattering classes. Last week’s losses in two Congressional special elections didn’t bode well. And frankly, it’s a bit late in the election cycle to be spending so much time wooing your core supporters. And all too often, as EJ Dionne has warned, Democrats have shown a tendency to focus on their disagreements, rather than unite around what should be common ground.

The vision thing

But the cuts plan that the president will unveil will be unashamedly populist, an appeal to progressives, and a chance to promote his vision. The plan is vitually certain to be thrown out by the Republicans. But this isn’t about getting majorities in Congress. With Obama’s approval ratings now at an all time low, he needs to start shaping the political argument on his own terms – and winning it.

Felicity Spector is a US politics analyst for Channel 4 News. Follow her on Twitter @felicityspector