http://www.bbc.co.uk/news/world-us-canada-13067836

Obama urges spending cuts and raised taxes

President Barack Obama has called for raised taxes on the rich as well as cuts in government spending in what he termed a balanced approach to cutting the huge US budget deficit.

In a speech in Washington DC he outlined a package of tax increases and spending cuts aimed at reducing the deficit by $4tn (£2.45tn) by 2023.

He attacked Republican plans he said would harm the poor and elderly.

Republicans have said any increase in taxes is a "non-starter".

"We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt," Mr Obama said in a speech at George Washington University.

"And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs, and win the future."

The ballooning US deficit is set to be a top issue in the 2012 election campaign, and in recent weeks, Republicans have laid out their own plan to cut it, based on big reductions in healthcare and social programmes for the poor and elderly and in education spending.

The deficit is forecast to reach $1.5 trillion (£921bn) this year and both Democrats and Republicans have said cutting it is a priority.

Mr Obama on Wednesday unveiled his own proposal - in a speech in which he used the word "vision" more than a dozen times.

The remarks came after Republicans had accused him of failing to exercise leadership, and many US political analysts said the Republican opposition had seized the political momentum.

Republicans on Wednesday attacked Mr Obama's speech as mere campaign rhetoric, noting he recently launched his re-election bid. Primarily, they firmly rejected his proposal to raise additional tax revenue from the wealthy.

"At a time when millions of our countrymen remain unemployed, the president again proposes tax increases on job creators," said Jeb Hensarling of Texas, a member of the party's House leadership team, calling Mr Obama's speech "class warfare".

Representative Paul Ryan of Wisconsin, chairman of the House budget committee, said: "Exploiting people's emotions of fear, envy and anxiety is not hope, it's not change, it's partisanship. We don't need partisanship. We don't need demagoguery. We need solutions."

Led by Mr Ryan, Republicans have offered their own proposal that would go further than Mr Obama's, slashing $6.2 trillion from government spending over the next decade, in large part through cuts to government programmes that serve the elderly and the poor.

The proposal would also drastically reduce taxes for wealthy Americans, a move conservatives say would boost economic growth.

The House is due to vote on Mr Ryan's proposal on Friday.

In his speech, the president repeatedly drew a contrast with the Republicans' proposal, insisting that spending cuts should not harm the US social safety net, such as the social security retirement system and healthcare programmes for the poor and elderly.

In particular, he singled out the Republicans' proposal to cut taxes for the wealthy while making elderly Americans pay more for their healthcare, as analysts say the Republican plan would work out.

"This is not a vision of the America I know," he said.

"They want to give people like me a $200,000 tax cut that's paid for by asking 33 seniors to each pay $6,000 more in health costs? That's not right, and it's not going to happen as long as I'm president.

"The fact is, their vision is less about reducing the deficit than it is about changing the basic social compact in America.

"There's nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires."

Bruising battle ahead

Buoyed by the fiscally conservative Tea Party movement, Republicans have won a series of policy victories, including forcing $38.5bn in government spending cuts for the remainder of the current fiscal year.

On Wednesday, Mr Obama also sought to brush back liberals in his own party who warn cutting spending now would hinder the nascent economic recovery.

"Doing nothing on the deficit is just not an option," he said. "Our debt has grown so large that we could do real damage to the economy if we don't begin a process now to get our fiscal house in order."

US political observers expect the fight over the government budget for the fiscal year beginning 1 October to be bruising, as Republicans and Democrats push their competing visions.

Last week, the US government came within an hour of shutting down as Republican and Democratic leaders battled to reach an agreement on a budget for the next six months.

The deal reached just before midnight on Friday cut $38.5bn in government spending to 30 September.

Opinions? Personally I think it's the way to go.

Edit: And for tl;dr. Obama says tax rich and cut spending to reduce deficit. Republicans don't think taxing rich is a good idea and is class warfare.

In a speech in Washington DC he outlined a package of tax increases and spending cuts aimed at reducing the deficit by $4tn (£2.45tn) by 2023.

The deficit is forecast to reach $1.5 trillion (£921bn) this year and both Democrats and Republicans have said cutting it is a priority.

Is that 1.5 this year alone, or total? else I'm confused, unless they expect it to peak above 4 trillion ..

Good point. Perhaps they don't mean annual deficit but reduction of net public debt?

It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?” he asked of how little he pays relative to his employees. “How can this be right?”

Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare.

“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”

http://www.nytimes.com/2006/11/26/business/yourmoney/26every.html

Were the Bush Tax Cuts Good for Growth?  (Not so much)

http://economix.blogs.nytimes.com/2010/11/18/were-the-bush-tax-cuts-good-for-growth/

King was somewhat troubled to find that the richest 1 percent possessed about 15 percent of the nation's income. (A more authoritative subsequent calculation puts the figure slightly higher, at about 18 percent.)

This was the era in which the accumulated wealth of America's richest families—the Rockefellers, the Vanderbilts, the Carnegies—helped prompt creation of the modern income tax, lest disparities in wealth turn the United States into a European-style aristocracy. The socialist movement was at its historic peak, a wave of anarchist bombings was terrorizing the nation's industrialists, and President Woodrow Wilson's attorney general, Alexander Palmer, would soon stage brutal raids on radicals of every stripe. In American history, there has never been a time when class warfare seemed more imminent.

That was when the richest 1 percent accounted for 18 percent of the nation's income. Today, the richest 1 percent account for 24 percent of the nation's income. What caused this to happen? Over the next two weeks, I'll try to answer that question by looking at all potential explanations—race, gender, the computer revolution, immigration, trade, government policies, the decline of labor, compensation policies on Wall Street and in executive suites, and education. Then I'll explain why people who say we don't need to worry about income inequality (there aren't many of them) are wrong.

http://www.slate.com/id/2266025/entry/2266026

All he's saying is to remove the cuts Bush foolishly added in the first place.

You don't cut your revenue when you already have a deficit.

^This

In fact Jon Stewart had a hilarious rebuttal to Ryan's plan and video

http://www.thedailyshow.com/watch/tue-april-12-2011/ryan-s-private-savings---path-to-prosperity

The issue isn't raising taxes on the rich. That really won't help. Every time we've lowered taxes for the rich, the percentage of income taxes we've gathered from them has actually gone up. Not down.

The real issue is cutting of subsidies and tax credits to the rich. Some of the richest people pay less than the middle class because they are given huge credits because of one thing or another. They have great accountants, too.

In reality, if we imposed a flat tax that offered virtually no subsidies, no incentives for particular behaviors, we would likely collect a lot more, and would ensure that those not paying wouldn't be able to dodge taxes.

Furthermore, fixing the tax code won't fix the entire problem. We had a $1.5 trillion deficit in the last year alone. Put it this way, under George W. Bush, our debt increased by $5 trillion dollars. Obama's increase in the deficit was 1/3rd of that in just one year.

To fix it, we do have to increase revenues by reforming the tax code, but also slash every single budget that the government has. Jon Stewart's Ryan rebuttal is a tragedy, because you can't really project future revenues all that well by changing the tax code, because we've seen that it rarely follows along expected forecasts. The only known quantity in a budget are actual outlays in spending, which is far more stable. Therefore, the more responsible thing to do is to cut spending. Of course, a lot of people hate doing that, because you can tax and reduce spending on anyone, until it effects you. We've seen that happen to horrible results all over the Western world when the government has had to introduce austerity measures.

And if you want information about tax rates and correlation of tax revenues:

We need a little class warfare. Something needs to happen to level the playing field

The US government doesn't have a revenue problem, it has a spending problem ...

The problem being that "cut the budget" always seems laser-targeted on cutting off medicare and other necessary entitlement programs, when these programs are quite honestly not comprehensive enough.

Revenue alterations are the only alternative, that and eliminating waste and streamlining programs without reducing benefits (and eventually increasing the benefits as is the only ethical long-term option).

And there is definitely a revenue problem when we're leaving so many groups that should be shouldering more of the burden paying absolutely nothing (or being owed money by the government, like GE)