The most important part of President Obama's proposal for deficit reduction may be the threat he's making with it.
As noted previously, the proposal calls for around $2 trillion in new deficit reduction -- more than $4 trillion if include the savings from drawing down military forces and already enacted cuts from the summer debt ceiling deal. Of that $2 trillion, about $1.5 trillion comes from higher taxes on the wealthy, starting with expiration of the Bush tax cuts on higher incomes. The remainder comes form spending cuts, including around $250 billion in Medicare "payment reforms." (That is, reductions in what Medicare pays for certain services and treatments.)
As in the past, Obama will describe his plan as balanced and asking for shared sacrifice. But this time he'll add a twist, according to a senior administration official:
the President will make clear that he will veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share.
That veto threat is new -- and a signal that, this time, the president really doesn't intend to compromise preemptively.
Update: Obama just finished his remarks in the Rose Garden and included some strong comments about "class warfare" -- which, according to Greg Sargent, was partly ad-libbed:
Warren Buffett’s secretary shouldn’t pay a higher tax rage than Warren Buffett. There’s no justification for it. It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million...
We’re already hearing the usual defenders of these kinds of loopholes saying, “this is just class warfare.” I reject the idea that asking a hedge fund manager to pay the same tax rate as a plumber or a teacher is class warfare. I think it’s just the right thing to do. I believe the American middle class, who’ve been pressured relentlesly for decades, believe it’s time that they were fought for as hard as the lobbyists and some lawmakers have fought to protect special treatment for billionaires and big corporations.
Nobody wants to punish success in America ... All I’m saying is, that those who have done well, including me, should pay our fair share in taxes to contribute to the nation that made our success possible.
As Sargent says, "this has to be the clearest sign yet that Obama has taken a very sharp populist turn as he seeks to frame the contrast between the parties heading into 2012."