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US politics live blog – Monday 19 September 2011

Live coverage of President Obama’s plans to reduce the US deficit with tax increases, Republican reaction and more

10.59am: Obama is bringing up the deficit reduction fight last time, saying he offered a grand bargain. “Unfortunately, the Speaker walked away from that plan.” He says that his plan today makes of spending cuts for each in new revenue.

Sadly, Obama has so far failed to recognise that it is International Talk Like A Pirate Day.

10.55am: Obama now speaking – and if you refresh this page (perhaps by offering it a drink of water) you will see live streaming video from the White House above.

10.40am: Obama is running late (as usual), which means CNN’s Gloria Borger – America’s worst political commentator – gets to discuss the length of a piece of string.

Meanwhile, my colleague Dominic Rushe forwards reaction from the Tea Party Nation:

Today, Obama is supposed announce the so-called “Buffett Rule.” The Buffett Rule is not named after Jimmy Buffett. The rule would make more sense if the White House economic staffers have had large numbers of Margaritas first. It would probably make even more sense if the Obama regime were drunk when they came up with this idiotic idea.

The “Jimmy Buffett rule” would however involve hefty taxes on cheeseburgers eaten in paradise, and increased duty on salt.

10.30am: Obama should be speaking shortly, but to get a handle on the numbers being talked about here’s a rough guide to the main areas for the perplexed.

Obama’s plan aims to cut the deficit by tn, made up mainly of:

Tax increases – .5tn made up of allowing the Bush tax cuts to expire (6bn) limits on deductions 0bn, closing loopholes 0bn.

Spending cuts – bulk of cuts coming from ending military operations in Iraq and Afghanistan (.1tn), and savings on interest payments (0bn).

10.20am: Buffett tax aside, what else is Obama proposing today? The White House has issued a fact sheet, Living Within Our Means and Investing in the Future – The President’s Plan for Economic Growth and Deficit Reduction, which includes these details:

Paying for Our Investments and Reducing the Deficit

The plan produces approximately .4 trillion in deficit reduction net the cost of the American Jobs Act.
• .2 trillion from the discretionary cuts enacted in the Budget Control Act.
• 0 billion in cuts and reforms to a wide range of mandatory programs;
• .1 trillion from the drawdown of troops in Afghanistan and transition from a military to a civilian-led mission in Iraq
• .5 trillion from tax reform
• 0 billion in additional interest savings

To spur economic growth and job creation, the plan includes one-time investment and relief in the American Jobs Act. That adds to the deficit in 2012 but is fully paid for over 10 years, and deficit reduction phases in starting in 2013, as the economy grows stronger.

Deficit reduction is achieved in a balanced approach, with a spending cut to revenue ratio for the entire plan (including discretionary cuts) of 2 to 1.

Deficits and Debt

The Joint Committee plan significantly reduces deficits and puts the country on a fiscally sustainable path by 2017.
• The deficit is projected to fall to 2.3 percent of GDP in 2021. By comparison, if we did nothing, the deficit would be 5.5 percent of GDP in 2021.
• Reaches “primary balance”– where our current spending is no longer adding to our debt – in 2017. At that point, current spending is no longer adding to our debt, debt is falling as a share of the economy, and deficits are at a sustainable level.

The President’s plan would reduce the national debt as a share of economy.
• Stable or falling debt as a share of the economy is a key metric of fiscal sustainability.
• If we did nothing, the national debt would rise to 90.7 percent of GDP in 2021. By contrast, under the President’s plan, the national debt would fall to 73.0 percent of GDP in 2021 – or an improvement of almost 18 percentage points.

10.11am: While we are waiting for President Obama to start speaking, here’s how the New York Times sees the coming battle over the deficit reduction that is looming – with Republicans tagging the tax increase as “class warfare”:

Mr Obama’s proposal is certain to receive sharp criticism from Congressional Republicans, who on Sunday were already taking apart one element of the proposal that the administration let out early: the so-called Buffett Rule. The rule – named for the billionaire investor Warren Buffett, who has complained that he is taxed at a lower rate than his employees – calls for a new minimum tax rate for individuals making more than million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers.

That proposal, which was disclosed on Saturday, was met with derision Sunday by Republican lawmakers, who said it amounted to “class warfare” and a political tactic intended to portray his opponents as indifferent to the hardships facing middle-class Americans.

Good morning and welcome to our rolling coverage of US politics – with President Obama about to unveil his suggestions for reducing the US federal budget deficit.

Here’s the Guardian’s coverage of Obama’s speech today:

Obama will unveil the new proposals on Monday at the White House and they will be submitted to a congressional “super-committee” that was created in August to draw up a deficit-reduction plan.

The president is also expected to propose nearly 0bn in cuts to spending on Medicare, the federal health care program that primarily benefits the elderly; 0bn in cuts to other mandatory benefit programs; and underline savings of tn from the withdrawal of troops from Iraq and Afghanistan.

The plans are said to include .5tn in tax increases aimed mainly at wealthy Americans and corporations, a “Buffett tax” aimed at those earning m or more a year and named after billionaire investor Warren Buffett who has repeatedly said that the wealthy such as himself are taxed too lightly.

Naturally the Republicans aren’t happy at the prospect of tax increases – setting the scene for another budget showdown in Washington.

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