The $1 Trillion Tax Battlefield Takes Shape

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President Obama didn’t offer a lot of specifics about how he intends to close the federal budget deficit in his speech at GW Wednesday, but he did make one thing clear: he intends to go head-to-head with Republicans over taxes.

That makes political sense. If he’s going to go after $2 trillion in spending, as his aides say he will in coming negotiations, he’s going to have to give Democrats, for many of whom that spending is sacred, some red meat. That red meat is $1 trillion in tax hikes aimed at primarily at the rich.

Obama teed up tax increases as a matter of morality and contrasted them with the proposals of House Budget Chair Paul Ryan. About tax cuts for the rich envisioned in Ryan’s plan, Obama said,

Think about it. In the last decade, the average income of the bottom 90% of all working Americans actually declined. The top 1% saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes?  They want to give people like me a two hundred thousand dollar tax cut that’s paid for by asking thirty three seniors to each pay six thousand dollars more in health costs? That’s not right, and it’s not going to happen as long as I’m President.

It was the first and only applause line of the speech.

Even before the president spoke today, the distance between Obama and Republicans over taxes came into focus.

A senior administration official briefed reporters Wednesday morning that the president’s plan would call for tax increases over 12 years that would boost revenue $1 trillion, though he declined to say how much would come from the expiration of the Bush-era tax cuts for the wealthiest Americans and how much would come from elsewhere. The president in his speech said much would come from so-called “tax expenditures” or credits and deductions in the tax code. He suggested he would protect the popular home mortgage deduction, but maybe not for the rich, and was otherwise unspecific.

For their part, Republican leaders on the Hill said taxes were off the table. “We will not be discussing raising taxes,” said Senate GOP leader Mitch McConnell at a press conference an hour before Obama spoke.

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