Rich must pay fair share of deficit cuts

WASHINGTON: The wealthy and corporations must pay their "fair share," US President Barack Obama said Monday, laying out a $3.0 trillion deficit cutting plan, half to be financed by tax hikes on the rich.

"We can't just cut our way out of this hole.... If we are going to make spending cuts... then it is only right we ask everyone to pay their fair share," Obama said in a speech in the White House Rose Garden.

"We can't afford these special lower rates for the wealthy. We can't afford them when we are running these big deficits," Obama said, fighting for the end of tax cuts for the rich passed by former president George W. Bush.

Obama's fiery, populist speech, setting out a fundamental clash with Republicans ahead of his 2012 reelection race, came as his political foes accuse him of waging class warfare to ease his political woes.

"This is not class warfare, it is math," Obama declared, arguing that without tax increases on those who could afford it the deficit could never be cut.

"Any reform plan will have to raise revenue to help close our deficit. That has to be part of the formula," Obama said.

"Middle class taxpayers shouldn't pay higher taxes than millionaires and billionaires. That's pretty straightforward. It's hard to argue against that."

Obama's proposals will bring total deficit cutting plans over the next decade to $4.4 trillion, officials said.

That topline figure includes $1.2 trillion in cuts in federal discretionary spending already agreed by Obama in August as part of a compromise which ended a standoff with Republicans over raising the federal debt ceiling.

It includes $580 billion in spending cuts across all mandatory spending programs and $1.1 trillion of savings realized from drawing down US troop numbers in Afghanistan and Iraq.

Tax reform would result in $1.5 trillion in savings, and a further $430 billion will be found in additional interest savings elsewhere.

Included in the spending cuts will be $248 billion in savings from Medicare programs for the elderly and $72 billion in cuts from the Medicaid service for the poor, officials said.

The tax portion includes $800 billion that would be saved by letting Bush-era tax cuts on individuals earning over $200,000 a year expire, a provision that will be fiercely fought by Republicans.

Copyright AFP (Agence France-Presse), 2011