Obama’s Deficit-Reduction Plan to Include $1.5 Billion in New Tax Revenue

President Obama will announce a plan to cut the U.S. federal budget deficit by $3 trillion over the next decade today, which will include a call for $1.5 trillion in tax increases mostly targeting the wealthy.

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Obama is scheduled to unveil his plan at 10:30 a.m. EST at the White House, presenting his recommendations to the 12-member constitutional committee created as part of the debt deal reached on August 2 in order to find ways to trim at least $1.5 trillion from the deficit. The panel has until November 23 to have reached a deal.

Obama’s proposal will also include Medicare-benefit cuts, but Obama has threatened to veto any deficit plan reducing Medicare benefits without increasing taxes on the wealthiest Americans. Obama does not plan to increase the age of eligibility for Medicare, according to one administration official who declined to specify what Medicare-benefit cuts the president will propose. Obama will seek $248 billion in Medicare cuts. Obama will not propose changes to Social Security, according to White House officials.

Obama will adopt billionaire investor Warren Buffett’s suggestion that the government raise taxes on the “mega-wealthy”. The provision, being called the “Buffett rule” in the White House, would require taxpayers with incomes of $1 million or more pay at least the same percentage in taxes as middle-income Americans. Obama’s prime target is the differential between the tax rates on capital gains and ordinary income. As the tax on capital gains is currently 20% lower than on income, it gives taxpayers an incentive to find ways to reclassify wage income as investment income.

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Obama’s plan will also seek $260 billion in savings from other “mandatory” programs not subject to annual appropriations, though officials would not specify which programs. Another $1.1 trillion would come from savings from winding down the wars in Iraq and Afghanistan.