“Right now, we’ve thrown a big wet blanket over the private-sector economy,” Senate Minority Leader Mitch McConnell (R-Ky.) said Sunday on NBC’s “Meet the Press.” “We’ve borrowed too much. We’ve spent too much. We’re drastically over-regulating every aspect of the private sector in our country, and now we’re threatening to raise taxes on top of it. That’s not going to get the economy moving.”
Obama will make his presentation Monday morning in the Rose Garden of the White House. He also may call for adjusting cost-of-living increases, scaling back farm subsidies and altering contributions to federal pensions.
The spending cuts and entitlement changes are expected to come in the form of detailed language. But the tax proposals are expected to be a series of targets and goals for a tax code overhaul aimed at lowering rates for most Americans while eliminating a variety of loopholes and deductions.
Obama is also likely to discuss corporate taxation, another sensitive issue for Democrats, because the White House is seeking to lower rates for businesses overall.
As of this summer, Obama was proposing an extension of the 2011 payroll tax cut and a renewal of unemployment benefits as the centerpiece of his economic strategy — measures that would pump about $160 billion into the economy. The president also called for a pooling of federal resources with local and private money into a bank to hire construction workers. And he called for the passage of trade agreements with South Korea, Colombia and Panama — causing some tensions with Democrats worried that the trade deals would drive jobs overseas.
Then, after Labor Day, Obama addressed a joint session of Congress and called for nearly $450 billion in tax cuts and direct infrastructure spending to boost the economy. While he mentioned the trade agreements in that speech, he has rarely mentioned them since.
Obama had agreed to take on his own party’s sacred cows — Social Security and Medicare — in a proposed deal earlier this summer with House Speaker John A. Boehner (R-Ohio). He agreed to reduce Social Security benefits starting in 2015 and to find nearly $400 billion in savings in Medicare and Medicaid, including by raising premiums for retirees and the eligibility age from 65 to 67.
But that proposed deal, which came together under the threat that the nation’s debt ceiling would not be raised, fell apart. Another, more modest deal averted a potential default on the debt.
Since then, Obama’s advisers decided Social Security should not be a part of the president’s proposal. Aides say the program is not a driver of short- and medium-term federal deficits and thus should be examined on a separate track.
Obama’s advisers have been vigorously debating whether to include raising the Medicare eligibility age as a component in their plans — a move opposed by most Democrats. “If he eschews Social Security cuts and raising the Medicare eligibility rage, I think he’ll be moving back to mainstream Democratic policy,” said Lawrence Mishel, president of the Economic Policy Institute.
A deal this summer to raise the federal debt ceiling included nearly $1 trillion in cuts in domestic spending and the creation of a congressional committee to find between $1.2 trillion and $1.5 trillion in additional budget savings.
Lately, Obama has urged the committee to find more in savings.
“We’re always going to be willing to work with anybody who works with us, but the president has an obligation to put forward those things that he thinks are important for our economy and for our country,” said David Axelrod, a longtime adviser to Obama.
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