Obama to propose $1.5 trillion in new tax revenue

WASHINGTON (AP) — President Barack Obama is proposing $1.5 trillion in new tax revenue as part of his long-term deficit reduction plan, according to senior administration officials, a plan that will draw a bright line with congressional Republicans.

The president on Monday will announce a proposal that includes the new taxes, nearly $250 billion in reductions in spending on Medicare, the federal health care program that primarily benefits the elderly; $330 billion in cuts in other mandatory benefit programs, and savings of $1 trillion from the withdrawal of troops from Iraq and Afghanistan.

The plan includes no changes in Social Security and does not include an increase in the Medicare eligibility age, which the president had considered this summer.

All in all, the president's plan is as much an opening bid as it is a political statement designed to draw contrasts with Republicans, who control the House of Representatives.

The new taxes in particular have little or no chance of passing Congress as proposed. Republicans were already lining up against the president's tax proposal before they even knew the magnitude of what he intended to recommend.

The $1.5 trillion in tax revenue would include about $800 billion realized over 10 years from repealing the Bush-era tax rates for couples making more than $250,000. It also would place limits on deductions for wealthy filers and end certain corporate loopholes and subsidies for oil and gas companies.

By adding the tax revenue, about $580 billion in proposed mandatory spending cuts, the savings from troop withdrawals and $1 trillion in spending cuts already in place, the combined deficit reduction would total about $4 trillion over 10 years. The administration also identified $430 billion in savings from lower interest payment on the debt.

Obama backed away from proposing sweeping changes to Medicare, following the advice of fellow Democrats that it would only give political cover to a privatization plan supported by House Republicans that turned to be unpopular with older Americans.

Administration officials said 90 percent of the $248 billion in 10-year Medicare cuts would be squeezed from service providers. The plan does shift some additional costs to beneficiaries, but those changes would not start until 2017, and administration officials made clear as well that Obama would veto any Medicare cuts that aren't paired with tax increases on upper-income people.

The president's plan also called for cuts of $72 billion over 10 years from Medicaid, the federal-state health care program for low-income people and the severely disabled. States, hospitals and advocates for the poor are expected to resist those.

Obama still confident in U.S. economy

BEIJING, Aug. 9 (Xinhuanet) -- US President Barack Obama, has made his first national speech after its credit rating was downgraded by Standard and Poor's. He said he hopes the downgrade will give lawmakers a new sense of urgency to tackle the country's deficit spending. Despite the rating downgrade, Obama said he is still very confident that the US economy will be put on the right track.

President Barack Obama played down the first-ever downgrade of the US' credit rating, expressing his confidence in the American economy.

He said, "On Friday, we learned that the United States received a downgrade by one of the credit rating agencies, not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system's ability to act. The markets on the other hand continue to believe our credit status is triple A."

And Obama reassured investors and the public that the nation's leaders need to show more "common sense and compromise" to tame a staggering accumulation of debt.

He said, "But here is the good news, our problems our imminently solvable and we know what we have to do to solve them. With respect to debt, our problem is not confidence in our credit, the markets continue to reaffirm our credit as among the world's safest. Our challenge is the need to tackle our deficits over the long-term."

Standard and Poor's was dissatisfied with the deal lawmakers reached last week just in time to prevent a debt default by the US government.

But Obama said most of the world's investors agree that the United States remains a wise place to put their money.

Obama said, "There will always be economic factors that we can't control. Earthquakes, spikes in oil prices, slowdowns in other parts of the world. But how we respond to those tests, that's an entirely up to us. Markets will rise and fall but this is the United States of America. No matter what some agency may say, we've always been and always will be a triple A country."

Still, stocks sank in trading on Monday as US investors joined a global sell-off after the downgrade.

Panel has 100 days to cut deficit $1.5T | Obama signs U.S. debt bill, capping weeks of political wrangling

WASHINGTON, Aug. 3 (UPI) -- Congressional leaders have two weeks to name members of a 12-member panel to find ways within 100 days of cutting the U.S. budget deficit by $1.5 trillion.

The panel's six Democrats and six Republicans from both chambers of Congress are required by the budget and debt law President Barack Obama signed Tuesday -- a law that raises the government's borrowing limit $2.4 trillion and cuts $917 billion in federal spending -- to propose $1.5 trillion in additional deficit cuts by Nov. 23.

The savings can come from spending cuts and tax increases -- options lawmakers predicted Tuesday would be argued in fiery debates.

Once the panel makes its proposal, Congress must vote on the package without amending it by Dec. 23, the law states. Senate approval will take 51 votes instead of the usual 60 needed to avoid a filibuster, which would prevent the measure from being brought to a vote.

If the special panel deadlocks, or if Congress doesn't accept its recommendations, the debt-ceiling law would automatically impose $1.2 trillion in cuts on so-called discretionary spending programs, including the defense budget.

Social Security, Medicaid, military and civilian federal pensions, and most low-income programs would be off limits from the "trigger" spending cuts. Medicare cuts would be limited to provider payments.

Once the reductions are enacted, the federal debt limit would go up by at least another $1.2 trillion, which is expected to give the government enough borrowing authority to carry through 2012.

It was not clear early Wednesday how most members of the panel would be selected.

Senate Minority Leader Mitch McConnell, R-Ky., said he would interview applicants, but Senate Majority Leader Harry Reid, D-Nev., House Speaker John Boehner, R-Ohio, and House Minority Leader Nancy Pelosi, D-Calif., did not immediately outline their selection plans.

Each is to name three members to the panel.

Republican leaders said they would not include anyone who's willing to raise taxes, prompting Democratic leaders to threaten a hard line against cuts to Social Security and Medicare benefits, which could be considered by the panel but would not be automatically cut by the trigger, The Washington Post reported.

Reid told the Post he'd like to "put people on it who are willing to do entitlement cuts ... people with open minds." But the GOP's uncompromising stand against tax increases "makes it pretty hard for me," he said.

Some Republicans may be open to raising revenue if it comes by ending tax breaks instead of raising tax rates, The Wall Street Journal reported.

Obama said the new law required "that both parties work together on a larger plan to cut the deficit. And since you can't close the deficit with just spending cuts, we'll need a balanced approach where everything is on the table."

"Everyone is going to have to chip in. It's only fair," Obama said.
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Panel has 100 days to cut deficit $1.5T | Obama signs U.S. debt bill, capping weeks of political wrangling 

Obama welcomes Twitter to White House

President Obama is hosting his first-ever Twitter Town Hall at the White House. Twitter has culled through thousands of tweets and developed summary questions for Obama. most of them dealing the the economy and jobs.
Some highlights:
2:35 p.m. -- Question 11: Can you give a tax break to a businesses that hire veterans.
Maybe, Obama says; they're looking into it.
2:33 p.m. -- A tenth question deals with help for small businesses.
Obama cites tax incentives and new rules for depreciation and financing.
2:29 p.m. -- Dorsey asks a question from, of all people, House Speaker John Boehner, R-Ohio: Where are the jobs?
Obama jokes "this is a slighly skewed question," but notes that he inherited an economy that was shedding jobs, but now employment is on the rise, though not at a rate people would like. Obama also promotes the business tax cuts he has championed, but chided the GOP for opposition to infrastructure development and other jobs prograns.
"Eventually, I'm sure the Speaker will see the light," Obama adds.
2:26 p.m. -- The eighth question deals with housing -- how do you help people with mortgages that are "under water."
Obama says his team is working with banks and lenders, trying to help alter problem mortgages.
2:24 p.m. -- A seventh questioner asks if Obama will "rectify" new state laws that restrict collective bargaining rights.
Obama defends unions, but says everyone will need to make sacrifices in a tough economy. He says he will work to protect the principle of collective bargaining at the federal level -- but can't do anything about state policies.
2:22 p.m. -- A sixth question is whether Obama will promote alternative energy programs in oil states like Louisiana and Texas?
Obama says he wants to promote new energy in every state.
2:20 p.m. -- Question five: Will there be start-up visas for foreign business people?
We're working on it, Obama says, again touting his plan for comprehensive immigration reform.
2:17 p.m. -- A fourth question -- from "renegade nerd" in Atlanta -- asks Obama if he will order debt payments even if Congress refuses to raise the debt ceiling, citing the 14th amendment of the Constitution.
After outlining the debt ceiling dispute with congressional Republicans, Obama says he doesn't think he needs to get to the constitutional issue -- says he expects to strike a deal with Congress in the next few weeks.
Still: he didn't say no.
2:13 p.m. -- Third question: What can be done about the high cost of higher education?

Obama talks about revamping the student loan system, lowering the costs by cutting out banks as middlemen. Obama says he has also eased rules on re-paying student loans. Says he encouraging colleges to keep their costs down.
The president jokes that he knows his Twitter answers should be short, but he can't help himself.
2:11 p.m. -- Second question: Why not talk more about high-tech jobs than manufacturing?
Obama says he wants to promote both sectors. Details some his plans.
2:08 p.m. -- First question: What mistakes have you made on the economy, and what would you have done differently.

Obama defends the stimulus bill and the auto bailout. He doesn't talk about mistakes, but says there are things he would have done differently -- one, explain better to people that recovery would take a long time; second, better housing programs.
2:05 p.m. -- Running a little late, President Obama appears with Twitter co-founder Jack Dorsey, who is moderating the event. The crowd claps and whoops it up.

Obama says he wants to make history by being "the first president to live tweet." As Dorsey jokes, "it's only 140 characters," Obama tweets out a question about the deficit -- what costs would you cut and what costs would you keep? We're pretty sure that was directed at the Republicans.
2:00 p.m. -- Our USA TODAY colleague Mimi Hall, who is in the East Room, reports that Obama will be flanked by three big flat television screens.

One screen carries the label "Topic Tracker," and shows that 28% of the questions are about jobs; 18% are about the budget; 17% taxes; 7% education, and 6% housing. A second screen simply says, "Twitter Town Hall @ the White House;" the third features a map of the United States, with dots showing where the questions are coming from.