Watch CBSN Live

GOP adviser: "Buffett tax" won't help jobless

A former director of the Congressional Budget Office and economic adviser to John McCain's 2008 presidential campaign said Tuesday that President Obama's tax-and-spending proposals (including a tax on the wealthiest Americans, the so-called "Buffett rule") won't help the unemployed.

On Monday the president described his proposal to cut $3.6 trillion from the deficit over the next 10 years - half of that amount coming from tax increases on the wealthy, including a new tax on the wealthy named after billionaire Warren Buffett (who has said it's not fair that his tax rate is lower than his secretary's), reports CBS News chief White House correspondent Bill Plante.

House Speaker John Boehner accused the president of divisiveness: "I don't believe that class warfare is leadership," he said. "We could get into this 'tax the rich, tax the rich,' but that is not, that's not the basis for America. And it's not going to get our economy going again and it's not going to put people back to work."

Trending News

The president has dismissed the Republicans' charges: "This is not class warfare; it's math," he said.

Douglas Holtz-Eakin, president of American Action Forum, a conservative policy forum, said on CBS' "The Early Show" that the president's proposal falls short, and that he is not evincing leadership.

"I think it misses in three ways," Holtz-Eakin told anchor Erica Hill. "First of all, a lot of the spending reductions are the presumed roll-down of the wars in Iraq and Afghanistan. That's going to happen, anyway, so that's not really a new proposal and he's counting it anyway.

"Second is on the tax front. The president has been quite eloquent about the need for tax reform, and those words are the right words. But the proposals he's put out - proposals for more targeted tax benefits, more temporary tax breaks, the 'Buffett rule' - are all things that complicate the tax code and move us away from tax reform. It would be nice to see proposals that matched to his words.

"But the real failing of this plan is it doesn't take on in a serious way the future growth in the entitlement programs," Holtz-Eakin said.

He characterized entitlements programs as "broken right now. Social Security is running red ink, Medicare is borrowing $280 billion a year from the general Treasury. Medicaid is entirely deficit-financed. We need a social safety net that is durable for the future. We can't afford the red ink that those programs are generating. And the president took a pass on fixing them in any substantial way. His proposals on Medicare are all waste, fraud and abuse, and we know that that is not what it takes."

[According to the most recent Treasury Statement dated September 15, 2011, to date this fiscal year the federal government borrowed $247.9 billion to cover shortfalls in operating expenses for ALL government programs, not just Medicare. Medicaid is jointly funded by the federal government and the states.]

Holtz-Eakin said, "At this point in our history, we need the leadership on the big problems, and that is the potential for a debt crisis and those entitlement programs."

When asked by Hill if he thought the president's proposal for a tax on millionaires amounted to class warfare, Holtz-Eakin replied, "I don't know what class warfare is. It's like, fairness is in the eye of the beholder. But I know as a matter of the tax policy necessary to raise the revenue to pay the government's bills and have this economy grow, these proposals don't take us there.

"There's nothing about the 'Buffett tax' that is going to solve the biggest unfairness we face, which is the gap between those who have a job and not who do not."

Also appearing on "The Early Show" was University of Chicago professor and former chairman of President Obama's Council of Economic Advisers Austan Goolsbee. He said that while he expected tax increases to kick in further down the road, the president's plan had the required balance of spending cuts and revenue increases.

"From what I read, the essence of the thing was trying to be balanced, that you would have some spending cuts, you would cut discretionary spending, you would cut defense, you would cut entitlements and you'd raise some revenue," Goolsbee said. He noted that tax rates for very high-income Americans "is the lowest it's been in something like 60 years."

[According to a 2007 study by economists Thomas Piketty and Emmanual Saez, federal income tax rates for the wealthiest percentile of Americans since 1960 have continually dropped (except for a blip during the Clinton administration); they are about half what they were in 1960.]

"I do think that a balanced approach is better than a one-sided approach" of just spending cuts, he added.

View CBS News In