Obama says tax rises must be a part of US deficit reduction plan
Monday, 19 September 2011 04:41
US President Barack Obama has set out his plan on how to reduce the US government deficit. He called for a balanced approach to reducing the deficit that has to include tax rises as well as spending cuts.
President Obama said: “Any reform plan will have to raise revenue to lower the deficit.”
Towards the end of his speech the President said: “I will not support any plan that puts all of the burden for cutting our deficit on ordinary people.”
He said: “There is no reason for Congress to drag its feet knowing that every proposal is paid for. The US jobs bill will not add to our countries debt.
“If we don’t act that burden will fall on our children’s shoulders. Washington has to live within its means.
“We have to cut what we can afford to pay for what really matters. We shouldn’t balance the budget on the backs of the middle class and the poor.”
A cross-party budget deficit reduction plan was agreed at the end of July to stave off a potential defaults on the US budget deficit.
The deal increased the debt cap by $2.4 billion that stopped a potential default earlier this summer, but political infighting between the Republicans and Democrats meant that only a temporary solution was found.
Some parts of the Republican Party refuse to accept any tax rises and have said that more cuts should be made to the key Democrat policy on medicare.
President Obama called for both parties to work together, saying: “It is our responsibility to put country before party.”
However, in his speech today, President Obama said that tax revenue was a part of the solution as well as spending cuts.
He said: “All these reductions in spending by themselves will not solve all of our fiscal problems. We can’t just cut our way out of this hole.
“It is only right that we ask everyone to pay their fair share."
His speech called on big business to pay the right amount of tax. He said: “This plan eliminates tax loopholes that primarily go to the wealthiest taxpayers and biggest corporations. We can’t afford these special lower rates for the wealthy. We can lower the corporate rate if we get rid of these special deals.
“Any reform plan will have to raise revenue to lower the deficit. Middle class families should not pay higher taxes than millionaires or billionaires.
“We have to prioritise. This is mot class warfare, it’s math."
President Obama said that he had submitted a plan “that reduces our debt by more than $4 trillion.”
He added: “[It] cuts $2 in spending for every $1 in new revenues.”
The inability to forge a long-term agreement meant that ratings agency, Standard &Poor (S&P) downgraded the US credit rating from its triple-A level to AA+. S&P said that the deficit reduction plan did not go far enough.
The agreement gave the President some breathing space and means that a similar agreement does not need to be made before next year’s presidential election.
However, President Obama promised to set out a more coherent longer term policy for reducing the US deficit from its unsustainable level of $14.3 billion, the position it was at the end of July.
In his speech today, President Obama outlined the economic policies he hopes will aid the economic recovery in the United States.
He called on large corporations to shoulder their burden of reducing the deficit.
He said: “The largest firms who were saved by the taxpayer during the financial crisis should repay us for every dime that we spent.
“We will save an additional $1 trillion as we end the wars in Iraq and Afghanistan.”
Doubts over the US economy and its political leaders’ ability to agree a deficit reduction policy has, along with the euro-debt crisis, contributed to the turmoil of global stock markets over the summer.
The Dow Jones fell by around 200 points (1.75 per cent) to sit at 11,310, moments after the speech ended.
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