Obama to propose deficit reduction plan

President Barack Obama will announce a plan today to tame the nation's rocketing federal debt that will draw a sharp contrast with the Republican vision and amount more to an opening play in the fall's debate over the economy than another attempt at finding common ground with the opposing party.

Obama will propose new taxes on the wealthy, a special new tax for millionaires, and elimination or scaling back of a variety of loopholes and deductions, officials say. About half of the tax savings come from the expiration next year of the Bush tax cuts for the wealthy.

Coming as a congressional supercommittee goes to work to find budget savings this fall, Obama's position will probably delight Democrats, who have fretted for months that he is doing too little to solve the nation's jobs crisis while being too willing to embrace major changes to Medicare and Social Security.

But his plan has little chance of passing and is already inflaming Republicans, who have vowed to oppose new taxes and have called for deep cuts in federal spending and entitlements. Sunday, Republicans responded with vitriol to the proposal to create a special tax for millionaires.

"Class warfare may make for really good politics, but it makes for rotten economics," Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, said on "Fox News Sunday." "It adds further instability to our system, more uncertainty, and it punishes job creation." Last week, Obama told supporters at a fundraiser in Washington that the upcoming debate will crystallize the difference between his views and the GOP's.

"2012 is going to offer a clearer contrast than I think we've ever seen before," Obama said. "If you see the direction that the Republican Party is now going in, you have a party that offers a fundamentally different vision of where America should be, and what we should be aspiring to, and what our core values are." White House officials say Obama will push for a new minimum tax rate on millionaires as part of a rewrite of the U.S. tax code. The measure is designed to compel the wealthiest Americans to pay the same share of income in taxes as middle-class families.

Obama is proposing $1.5 trillion in new tax revenue as part of his long-term deficit reduction plan, The Associated Press reported. The president will announce a proposal that includes new taxes, nearly $250 billion in reductions in Medicare spending, $330 billion in cuts in other mandatory benefit programs and savings of $1 trillion from the withdrawal of troops from Iraq and Afghanistan.

The plan includes no changes in Social Security and does not include an increase in the Medicare eligibility age, which the president had considered this summer.

A proposed special tax, which Obama is planning to call the "Buffett Rule," will target the top 0.3 percent of American earners, whose income often comes from investment profits.

With AP