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updated 4/12/2011 5:39:19 PM ET 2011-04-12T21:39:19

Higher taxes have been missing from the fierce budget battle that nearly shut down the federal government. But President Barack Obama is about to put them on the table — at least a modest version that he had pushed before and then rested on the shelf.

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Most economists and budget analysts say a comprehensive mix of spending cuts and tax increases is essential to any viable deficit-reduction plan. Yet few players in the negotiations have gone there.

It comes in the scramble to heed what is widely viewed as a loud clamor from voters to slam the brakes on runaway government spending. There has been no corresponding public demand for raising taxes. That's not surprising, but the top-bracket U.S. tax rate now is the lowest it's been in decades, and it's far lower than those in many other industrialized countries, especially in western Europe.

Tax elements of Obama's broad deficit-reduction plan, to be laid out in a speech Wednesday, seem likely to revive his earlier proposals.

First Read: Bigger budget battles ahead

The president is expected to bring back his recommendation, first made in the 2008 campaign, to end Bush-era tax cuts for households earning over $250,000 a year. He temporarily set it aside when he signed onto a late 2010 agreement with Republicans to extend all Bush tax cuts for two years.

However, he did renew the bid earlier this year in his budget for the 2012 fiscal year that begins Oct. 1.

Story: Budget tricks helped Obama save programs from cuts

Mix of spending cuts and tax increases
Any comprehensive deficit-reduction plan must include a mix of spending cuts and tax increases, experts argue from both sides of the political spectrum.

"There's no alternative, and I don't know of anybody who has seriously looked at this problem who thinks there is," said William A. Galston, a White House domestic policy adviser during the Clinton administration. "You're going to need to put together tough packages of programmatic cuts and revenue increases."

Still, House Speaker John Boehner, R-Ohio, denounced Obama's tactics ahead of the president's speech. "Tax increases are unacceptable and are a nonstarter," Boehner said Tuesday in a statement. "We don't have deficits because Americans are taxed too little, we have deficits because Washington spends too much."

Boehner's shot across the bow underscored the difficult road Obama has ahead of him in pushing any tax increases, even ones limited to the wealthiest Americans.

With a presidential election just around the corner, and voters demanding cuts in government spending, few politicians seem eager to climb out on a higher-taxes limb.

Story: Obama poised to enter long-term budget fight

Even Obama's bid to end Bush-era tax cuts for the wealthiest Americans — bitterly fought by Republicans — would just take tax rates on them back to where they were in the 1990s, a decade of strong economic growth.

A sweeping Republican proposal laid down by House Budget Committee Chairman Paul Ryan of Wisconsin proposes trimming more than $5 trillion from deficits over the next decade, but it does so almost exclusively on the spending side of the ledger, including a drastic reshaping of Medicare and other federal safety-net entitlement programs.

The Ryan plan doesn't only fail to propose major new tax increases, it advocates lowering the top tax rates for both corporations and individuals to 25 percent from the current 35 percent.

This comes amid disclosures of low tax payments by some of the nation's biggest companies, including General Electric Co., which made $14.2 billion in worldwide profits last year, but paid no U.S. corporate taxes in 2010.

'The burden has to be shared by everybody'
White House spokesman Jay Carney said Tuesday that the plan Obama will outline on Wednesday at George Washington University would contain both spending cuts and tax increases. "The president believes there has to be a balanced approach," Carney said. He declined to elaborate.

Carney said that the GOP plan drafted by Ryan is unbalanced "through it's rather drastic reform of Medicare and Medicaid. ... That's not the approach the president believes is the right way to go. ... The burden has to be shared by everybody."

Meanwhile, the budget deal negotiated by the White House and Congress to avert a government showdown — scheduled to be voted on Thursday — was drawing criticism from some conservative Republicans. Rep. Jim Jordan of Ohio, who chairs the influential Republican Study Committee, said he'll be among those voting no. "Americans want us to reach higher, act bolder, and remember the job we were sent here to do," Jordan said.

Heavy pressure from the Tea Party wing of the Republican Party, with its insistence on smaller government and strong opposition to new taxes, has complicated efforts by Republican leaders, especially House Speaker John Boehner of Ohio, to find common ground with the White House.

Democrats aren't exactly crying out for raising taxes now either. Not with approaching national elections and a restive electorate unhappy with levels of federal spending.

Obama's proposal to let the Bush tax cuts expire for families making over $250,000 or individuals earning above $200,000 will be woven into the upcoming presidential election. In emphasizing it now, rather than later, Obama all but assured that outcome.

Obama also is expected to call for other changes in the tax code, which he contends benefits the rich.

"Every corner of the federal government has to be looked at here," senior White House adviser David Plouffe says. "Revenues are going to have to be part of this." "Revenues" has always been Washington code for more taxes.

Bipartisan debt commissions
The bipartisan deficit-reduction commission appointed by Obama, led by Democrat Erskine Bowles and Republican Alan Simpson, called late last year for slashing about $4 trillion from budget deficits over the coming decade.

Roughly two-thirds of that would come through program cuts and one-third through increased taxes. Although overall tax rates would decline, dozens of popular tax breaks would be scaled back or eliminated, including the child tax credit, mortgage interest deduction and deduction claimed by employers who provide health insurance.

Obama praised the panel for its work, but embraced few of its recommendations, and none of the major ones on new taxes.

About the same time, another bipartisan panel headed by Republican Pete V. Domenici and Democrat Alice Rivlin came out with its own plan that would go even further — getting roughly half of its deficit reductions from tax increases and half from spending cuts.

Rivlin, a former Federal Reserve vice chairwoman and budget director in the Clinton administration, says there's no other way than a mix. "It cannot be all on the spending side," she said.

Entering dangerous territory
Panels recommending tax increases haven't fared very well. When President George W. Bush's tax-code overhaul commission, chaired by former GOP Sen. Connie Mack of Florida, recommended big cuts in the cherished home mortgage deduction and other popular tax breaks in 2005, Bush gave it a cold shoulder.

Ever since Democratic presidential candidate Walter Mondale famously said in 1984 that, if elected, he would reluctantly raise taxes — and promptly got clobbered in President Ronald Reagan's re-election landslide — advocating tax increases has been dangerous territory for politicians of all stripes.

Story: White House: Obama to lay out spending plan

Reagan's "supply side" economics, the notion that tax cuts can pay for themselves and that lower taxes mean higher revenues, remains Republican gospel. No matter that few mainstream economists totally subscribe to that theory, or that Reagan proposed tax increases in every one of his eight years in office except the first.

"It's gotten much worse since then," suggests Bruce Bartlett, a domestic policy adviser to Reagan and a Treasury official under President George H. W. Bush. Bartlett cited the growing influence of unrelenting anti-tax advocates like Americans for Tax Reform and some within the Tea Party movement.

Bartlett said he's "enough of a libertarian" to wish that the nation's budget woes could indeed be solved by spending cuts alone. "But I just don't see how that's humanly possible, giving the aging of our society, the wars we're involved in and various other things."

This year's budget deficit is expected to be a record $1.6 trillion. But that's just for one year. Added to previous years' deficits, it brings the national debt to a shade under $14.3 trillion. Annual deficits are expected to decline as the economy recovers from the worst downturn since the 1930s, but then climb again as millions of baby boomers qualify for government Social Security and Medicare benefits.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Obama to announce plan to tackle deficit

  1. Closed captioning of: Obama to announce plan to tackle deficit

    >> a budget tug of war over spending and deficit cuts. president obama entering the ring tomorrow with what could be the first serious white house embrace of the simpson/bowles deficit reduction plan. commission recommendation gained little traction last fall, but now the president is expected to lean heavily on the bipartisan panel's proposals in his counter to house republicans. six senators, three from each party, meanwhile have been trying to turn the recommendations into legislation. can the president persuade congress to take a second look? with us now, msnbc's senior political analyst mark halperin , editor at large for "time" magazine and co-author of "game change." let's talk about what the president is planning tomorrow. what is your reporting telling you about exactly how far he's willing to go?

    >> he's going to be more specific than he was in his budget where he pretty much ignored these issues when he put out his budget at the state of the union . i think he's going to be trying to frame the issue in terms of the choices that the country faces. but he's not going to put down a marker that goes as far, i think, as paul ryan , the house republican budget chairman. it is not going to answer a lot of the questions that people still want to hear him answer, how much is he willing to compromise? i don't think being specific is necessarily going to help us to get to entitlement reform and deficit reduction tomorrow. he's got to be specific enough to keep things moving, but if he's very specific, i think the white house is right, it will all collapse right away.

    >> but doesn't he risk being accused, as he has been already by his opponents, of not being in the game, of not showing the courage that some would say the house republicans showed of not being part of the conversation?

    >> he could be accused of that. the president doesn't much care about being accused by washington pundits of things like that. he cares about results. again, it doesn't mean i agree with what he's trying to do in any particular case, but people misjudge him if they think he's caught up in what washington is going to say about him. the trick is, how do you get a deal because to get a deal, as david plouffe pointed out on "meet the press" on sunday it going to have to involve compromise with the house republicans. he proved he could compromise with john baner er iboehner in the lame duck session . he proved he could make a deal just last week over the weekend on the continuing resolution, he can get a deal, he's got to deal with the timing. i think he's going to need something like the threat of the default of the united states government in order to try to get people on his side to say we have no choice but to compromise.

    >> and can he keep the conversation on the fiscal side and not on the social issues? this is the co-chairman of the simpson/bowles panel, alan simpson , talking about all the social questions his own party was raising. this was on "hard ball" with chris matthews last night.

    >> we have homophobes in our party. that's disgusting to me. we're all human beings , we're all god's children. i'm not sickened with people who are homophobic, you know, and moral values while you're diddling your secretary while you're giving the speech on moral values . come on. get off of it.

    >> the incomparable alan simpson , part of the conversation about whether the abortion issue and other issues should be any part of the budget deal.

    >> those kinds of issues are going to come up. the president successfully kept a fair number of them out of the cr deal. i think the bigger issue for the president and fascinating to see how he frames this tomorrow, is can he win the fight more than he has on tax cuts for the wealthiest americans . paul ryan 's budget proposes big tax cuts for wealthy individuals and corporations. those add to the deficit in the short-term, even if you're a supply sider. you have to see that. the president has to figure out a way to try to win the fight and say i'm for raising revenue from the wealthiest americans . he couldn't win it during the lame duck session , couldn't win it over the past few months in trying to reframe the issue. the only way there is going to be deficit reduction is if there is tax increases, and entitlement cuts. the president is going to have to talk about both. the question is, can he put republicans more on the defensive on the tax cuts because he the tax increases because he many vu them if he gets serious deficit reduction.

    >> okay. mark halperin , you've completely -- perfectly teed this up for us. thank you very

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