Obama to open fiscal talks with plan to raise taxes on wealthy

President Obama (Getty Images)

President Barack Obama will begin talks with congressional leaders Friday with a plan to raise $1.6 trillion in new tax revenue from the wealthy — making clear that, at least the outset, a wide gulf remains between congressional Republicans and the White House on the most contentious point in the negotiations.

While Obama said last week he is not wedded to every detail of his previous proposals, the White House said Tuesday that it did not intend to provide any new plan or make any concessions ahead of the start of negotiations.

Rather, Obama will present his 2013 budget as his starting point — a plan that sought to reduce borrowing over the next 10 years by $4 trillion.

"We know what a truly balanced approach to our fiscal challenges looks like," Press Secretary Jay Carney said Tuesday. "The president has put forward a very specific plan that will be what he brings to the table when he sits down with congressional leaders."

Obama meets Friday with top lawmakers from both parties to begin negotiations on the fiscal cliff, a series of automatic tax hikes and spending cuts at the end of the year. Obama has said that the election validated his approach to tax policy.

Obama's previous proposal called for raising $1.6 trillion in new taxes on the wealthy by allowing tax rates to increase, imposing a new special tax on millionaires and limiting deductions for the wealthy. He also proposed $340 billion in health-care and entitlement savings, continuing $1.1 trillion in spending cuts already passed into law and generating another $1 trillion in savings through the end of the wars in Iraq and Afghanistan.

The demand for $1.6 trillion in new taxes is far greater than Obama proposed in negotiations with House Speaker John Boehner, R-Ohio, in summer 2011. At the time, Obama wavered between $800 billion and $1.2 trillion in new tax revenue, depending on how much in entitlement cuts Republicans were demanding.

After the election, Boehner signaled a fresh openness to raising taxes on the wealthy — though under what precise circumstances is not clear. He said he is opposed to raising tax rates, but has left open the possibility of increasing revenue by limiting deductions. A spokesman declined to comment on Carney's comments Tuesday.

"I don't think Washington should get any of that extra revenue. I don't think we need it," Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday. "But in a good-faith effort to make progress on boosting the economy and government's long-term solvency, Republicans like me have said for more than a year now that we're open to new revenue in exchange for meaningful reforms to the entitlement programs."

In last year's budget negotiations, Obama considered two major changes to entitlement programs, tentatively agreeing to raise the Medicare eligibility age from 65 to 67 and to slow Social Security spending. While he may not be closed to the ideas in the upcoming negotiations, he is not opening the talks with such concessions.

"The president views the issue of deficits and debt not in a vacuum. He does not believe that reducing deficits and debt are values unto themselves," Carney said. "He believes that they are part of an approach that is driven by his number one priority, which is economic growth and job creation."