Obama First To Put Tax Increases In The Budget Table

WASHINGTON - Higher taxes have been absent from the fierce battle that nearly ended budget federal government. But President Barack Obama is about to put on the table - at least a modest version that had driven before and then rested on the shelf.

Most economists and budget analysts say a comprehensive mix of spending cuts and tax increases is essential to any viable plan for deficit reduction. However, few players in the negotiations have gone there.

It comes in the fight to pay attention to what is widely seen as a cry for voters to slam the brakes on government spending out of control. There has been no corresponding public demand to increase taxes. That is not surprising, but the top bracket tax rate in the U.S. Now is the lowest it has been in recent decades and is much lower than many other industrialized countries, especially in western Europe.

Tax elements of Obama's comprehensive plan for deficit reduction, which is fixed in a speech on Wednesday, seems likely to revive its earlier proposals.

The president is expected to bring back its recommendation for the first time in the 2008 campaign to end the Bush-era cuts taxes for families earning over $ 250,000 a year. He temporarily set aside when in late 2010 signed an agreement with Republicans to extend Bush's tax cuts for two years.

However, the offer was renewed earlier this year in its budget for fiscal 2012 which begins October 1.

Any comprehensive plan for deficit reduction should include a combination of spending cuts and tax increases, experts say both sides of the political spectrum.

"There is no alternative, and do not know anyone who has seriously looked at this problem thinks there is," said William A. Galston, advisor to the White House, national politics during the Clinton administration. "You will need to assemble packages of hard programmatic cuts and increased revenues."

With presidential elections just around the corner, and voters are demanding cuts in government spending, some politicians seem willing to go out on a limb higher taxes.

Even Obama's attempt to end the Bush cuts taxes for the wealthiest Americans - bitter by the Republicans - just take the tax rates back where they were in the 1990's, a decade of strong growth economic.

A radical proposal introduced by Republican House Budget Committee Chairman Paul Ryan of Wisconsin proposes to cut more than $ 5 trillion deficit over the next decade, but almost exclusively on the expenditure side of the book, including a drastic restructuring Medicare and other federal safety net-welfare programs.

Ryan's plan proposed not only major new tax increases, which advocates reducing the higher tax rates for both companies and individuals to 25 percent from the current 35 percent.

This comes amid revelations of lower tax payments by some of the largest companies in the country, as General Electric Co., which earned $ 14.2 billion in revenue worldwide last year, but did not pay U.S. corporate taxes. UU. in 2010.

"We strongly disagree with the lack of balance in the approach of the Congress of Ryan," said White House spokesman Jay Carney Monday. "We understand that people will come to the table with different points of view, but the president believes that we must have balance."

strong pressure from the tea party wing of the Republican Party, with its emphasis on smaller government and strong opposition to new taxes, has complicated the efforts of Republican leaders, especially House of Representatives, John Boehner, of Ohio, to find common ground with the White House.

Democrats are not exactly clamoring to raise taxes now, too. Not to approach national elections and a fickle electorate satisfied with the level of federal spending.

Obama's proposal for the Bush tax cuts expire for families earning more than $ 250,000 or individuals earning more than $ 200,000 are woven into the next presidential election. By emphasizing that now, rather than later, Obama, but said that all the results.

Obama is also expected to call other changes in the tax code, which holds benefits the rich.

"All over the federal government has to be seen here," White House adviser David Plouffe senior, said. "Revenues will have to be part of it." "Income" has always been the Washington code for more taxes.

The bipartisan deficit reduction appointed by Obama, led by Democrat Erskine Bowles and Republican Alan Simpson, called last year to cut about $ 4 billion budget deficit over the next decade.

Approximately two thirds of those who come through program cuts and a third through higher taxes. Although the overall tax rates would fall, dozens of popular tax cuts would be reduced or eliminated, including the child tax credit, the mortgage interest deduction and the deduction for employers who offer health insurance.

Obama praised the panel for their work, but adopted some of its recommendations, and none of the most important in the new tax.

Almost simultaneously, another bipartisan group led by Republican Pete V. Domenici and Democrat Alice Rivlin out with his own plan to go even further - get about half the deficit reduction of tax increases and half of the spending cuts.

Rivlin, former Federal Reserve vice president and budget director in the Clinton administration, says there is no other way than a mixture. "There can be all on the expenditure side," he said.

Panel to recommend tax increases have not fared very well. S When President George W. Bush, the commission's review of the tax code, chaired by former Republican Senator Connie Mack of Florida, recommended large cuts in valued mortgage deduction and other popular tax benefits in 2005, Bush gave him a cold shoulder.

Since the Democratic presidential candidate Walter Mondale in 1984 famously said that, if elected, reluctantly to raise taxes - and quickly got a beating in the collapse of President Ronald Reagan's reelection - defending the tax increase has been dangerous territory for politicians of all colors.

Reagan's "supply side" economics, the idea that tax cuts can pay for themselves and that the tax cut means higher income, remains a Republican gospel. Never mind that few economists integrate fully subscribe to this theory, or that Reagan proposed tax increases in each of his eight years in office, except the first.

"It has gotten much worse since then," said Bruce Bartlett, a domestic policy adviser Reagan and a Treasury official under President George HW Bush. Bartlett cited the growing influence of the implacable anti-tax advocates like Americans for Tax Reform and some within the protest movement.

Bartlett said he is "enough of a libertarian" to hope that the nation's budget woes could actually be solved by spending cuts alone. "But I do not see how that is humanly possible, given the aging of our society, the wars we are involved and various other things."

deficit budget this year is expected to be a record U.S. $ 1.6 billion. But that's only for one year. Added to the deficits of previous years, bringing the national debt to a shade under $ 14300000000000. Annual deficits are expected to decline in the economy recover from its worst recession since the 1930's, but then rise again as millions of baby boomers qualify for the government of the Social Security and Medicare benefits.