GOP On Notice: No Renewal of Tax Cuts For Wealthy; Fueling Debate Over Spending
BLITZER: President Obama is insisting taxing the rich is key to helping reduce the long-term federal debt.</s>OBAMA: Some will argue we should not even consider ever, ever raising taxes, even if only on the wealthiest Americans. It's just an article of faith to them. I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more. I don't need another tax cut. Warren Buffett doesn't need another tax cut. Not if we have to pay for it by making seniors pay more for Medicare or by cutting kids from Head Start or by taking away college scholarships that I wouldn't be here without, and that some of you wouldn't be here without. And here's the thing: I believe that most wealthy Americans would agree with me. They want to give back to their country, a country that's done so much for them.</s>BLITZER: Let's dig deeper right now with Mary Snow, she's working this part of the story for us. This is a huge controversy, extending the Bush tax cuts for the wealthy. The president says he is not going to go along with it anymore. Go ahead and give us your fact check.</s>MARY SNOW, CNN CORRESPONDENT: Well, all right, Wolf, as you know and your viewers know this, this is just one part of the president's plan, but budget experts say taxing the rich won't bring in as much revenue as people might think.</s>SNOW (voice-over): He said it before and President Obama vowed again not to extend Bush-era tax cuts for families making more than $250,000 a year.</s>OBAMA: We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society.</s>SNOW: If those tax cuts are not renewed, it would mean that taxes would go up for about 2 percent of the population, the president calls them the richest Americans. But budget experts say it's not enough to help lower the deficit, even with spending cuts. Here's a hypothetical scenario. The Congressional Budget Office crunched the numbers, if taxes were 1 percentage point for people in the top two tax brackets, it would amount to $115 billion over a decade. But raise taxes by that same amount, 1 percentage point, on all the other brackets, and it comes to just under $500 billion. CNNMoney's Jeanne Sahadi says there are other reasons why the richest Americans cannot generate the kind of revenue that is need.</s>JEANNE SAHADI, SR. WRITER, CNNMONEY.COM: The income of the very wealthy tends to be more volatile than the income of most people because it's tied up with investments. And when the economy goes south, often their income gets hurt. So you're not going to get as much revenue from them as you might expect, especially when you need it in a downturn. And two, there are just not that many rich people. As much as we think there are a lot of them, they're not enough to carry the country in terms of deficit reduction.</s>SNOW: But with the 2012 presidential election around the corner, budget experts say no one wants to raise taxes on the middle class. Ron Haskins, who served as a senior adviser on welfare policy to President George W. Bush, says both Democrats and Republicans are wrong.</s>RON HASKINS, SR. ECONOMIC FELLOW, BROOKINGS INSTITUTION: Republicans are betting that if they say no new taxes, the American people will like that and we'll try to do it all on the spending side. The problem is spending affects the American public, too. A lot of people are going to lose their benefits. And Democrats say we'll just tax the rich and not the middle class, but that won't produce enough revenue, so that's not going to work either.</s>SNOW: And if the last fight of the Bush-era tax cuts is any indication this will be a fierce battle, the president had vowed many times he wouldn't extend the Bush-era tax cuts, but in December he did. He said he did so in order to prevent a tax hike on middle class Americans. And Wolf, want to remind our viewers, for much more on this debate, you can check out, of course, CNN's Money Web site.</s>BLITZER: And the debate is only beginning, Mary. Thanks very much. Let's dig deeper right now with CNN Senior Political Analyst Gloria Borger. The president had been on the sidelines over these past several months, waiting for the Republicans, presumably, to come up with their plan. Now he's playing. He's part of this fight right now. He's no longer on the sidelines.</s>GLORIA BORGER, CNN SR. POLITICAL ANALYST: No, not on the sidelines anymore. And I think as we go through the 2012 campaign, we may very well look back at this speech as the first speech of the 2012 campaign. I don't know about you, but what I heard the president -- he seemed almost emotional in a way that I hadn't heard him before, particularly over the issue of Medicare. Just listen to what he said, and then listen to what the House budget chairman, Paul Ryan, said in response.</s>OBAMA: I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves.</s>REP. PAUL RYAN (R), WISCONSIN: Exploiting people's emotions of fear, envy and anxiety is not hope, it's not change. It's partisanship.</s>BORGER: Well, it was very partisan, Wolf, and we're used to seeing the president stand back and let other people draw the bright red lines. Well, today, he drew the bright red line, not only on no vouchers for Medicare, but also on, as Mary Snow was talking about, the tax cuts for the wealthy, extending them. And he said, "I did that once and I refuse to renew them again." So there isn't any wiggle room in that one, Wolf.</s>BLITZER: Well, we've heard some statements like that over the past couple of years, and he did eventually find some wiggle room because he had no choice. He's got to be pragmatic, he's got to compromise. But on that issue, he's got some strong political base on which to deal.</s>BORGER: Sure, he does. On Medicare, of course, with seniors. But on the tax issue, he's on very safe terrain. You know, we had to deal with this during the lame-duck session when, in the end, they ended up extending the tax cuts for the wealthy. Take a look at this poll we did back in December, when it was a large issue. And you can see by about a 2-1 margin, 37 percent, favored a tax cut -- extending a tax cut for Americans with more than $250,000 and 62 percent opposed it. So, you see, not very popular. The question is, Wolf, where will the public stand on the larger debate that we're about to enter into? And that is the question of tax reform. Are they willing for a lower marginal rate to give up some pretty sacrosanct tax deductions like their home mortgage and charitable giving? That's going to be the really interesting debate.</s>BLITZER: Yes, but e said -- the president said -- only the richest would give up some of those deductions.</s>BORGER: That's right.</s>BLITZER: The middle class would not be affected.</s>BORGER: And because it's the richest who itemize more than anybody else.</s>BLITZER: Right.</s>BORGER: Exactly.</s>BLITZER: All right. This debate is going to be fierce, intense, and I think you're absolutely right, today was the opening salvo of campaign 2012 for the race for the White House.</s>BORGER: On to the debt ceiling.</s>BLITZER: There's some significant differences there no matter who the Republican nominee turns out to be.</s>BORGER: Exactly.</s>BLITZER: We're sitting down with four House freshmen members. Their thoughts on how Speaker John Boehner is doing, that's coming up next.