Obama: ‘Buffett Rule Won’t do Enough to Close the Deficit’

April 11, 2012 - 4:12 PM

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President Barack Obama, left, and investor Warren Buffett. (AP Photo

(CNSNews.com) – President Barack Obama Wednesday touted the benefit of the so-called “Buffett Rule” in paying down the federal deficit, but later conceded it would make a major impact.

Delivering remarks about the proposal that would increase taxes on higher earners to ensure no one pays a lower rate than a middle income earner, Obama said, “In a perfect world, none of us would have to pay any taxes. We’d have no deficits to pay down. And schools and bridges and roads and national defense and caring for our veterans would all happen magically.”

Obama has made “fairness” a central theme of his campaign.

“As I said, for most of the folks in this room, taxes are lower than they’ve been, or as low as they’ve been, in 50 years,” Obama said, speaking at the Eisenhower Executive Office Building.

“There are others who are saying, well, this is just a gimmick. Just taxing millionaires and billionaires, just imposing the Buffett rule won’t do enough to close the deficit. Well, I agree. That’s not all we have to do to close the deficit. But the notion that it doesn’t solve the entire problem doesn’t mean that we shouldn’t do it at all.”

If the Buffett Rule legislation, proposed by Sen. Sheldon White House (D-R.I.), is enacted, it would generate $46.7 billion in revenue over the next 10 years. That’s in contrast to the $7 trillion in projected federal budget deficits over the next decade.

For Fiscal Year 2013, the Obama administration has proposed a budget of $3.6 trillion. A version of that proposal was defeated in the House of Representatives on Mar 28 by a vote 414-0.

Senate Minority Leader Mitch McConnell (R-Ky.) said it is “unfortunate” that Obama would ignore more pressing issues to focus on a campaign issue.

“Sadly, an administration that promised it would focus on jobs is wasting yet another day on a political event that won’t take a single person off the unemployment line,” McConnell said in a statement.

“With millions out of work, gas at nearly $4 a gallon, and the election still seven months away, Republicans are calling on the president to join us in support of the dozens of jobs and energy bills that have passed the House but are stalled in the Democrat-led Senate,” McConnell said. “We should be focused on jobs and energy legislation that can pass—not tax-hike show-votes designed to fail.”

The Buffett Rule proposal is named for billionaire investor Warren Buffet, and basically says that no one making more than $1 million a year should pay a smaller share of their income than a middle-income household would pay, which would be a maximum of 35 percent for income.

Under the current tax code, the highest tax rate for investment income (dividends) is 15 percent. The highest tax rate for wages (personal income) is 35 percent. Thus, it is possible for someone who makes a low wage income, but is wealthy from investment income dividends -- like Buffett, chairman of Berkshire Hathaway – to pay a lower percentage in federal taxes than someone who earns less in wage income. However, this only refers to lower tax rates. A millionaire would still pay more in actual tax dollars than a middle income earner.

Critics, meanwhile, point out that the Bureau of Public Debt Web page has a form that allows voluntary contributions to help pay down the debt. The Web site pay.gov says, “Welcome to the United State Treasury's site for making donations to help reduce the public debt. If you would like to make a donation, please fill in the required fields and click the Submit Data button when completed.” The form has a field for the name of the donor, credit card number and other information.