Obama Talks Tax Cuts, Cutting $1.3 Trillion Deficit in Half

Photograph of President Obama before filming his weekly address by Pete Souza/White House

In his weekly address, President Obama discussed the economy (of course) and made two points: First, that 95% of Americans will get a tax cut, because employers will withhold less taxes—"By April 1st, a typical family will begin taking home at least $65 more every month." And, second, he will outline steps to tackle the huge deficit, "On Tuesday, I will speak to the nation about our urgent national priorities, and on Thursday, I’ll release a budget that’s sober in its assessments, honest in its accounting, and that lays out in detail my strategy for investing in what we need, cutting what we don’t, and restoring fiscal discipline." Here's his address:

Obama wants to halve the deficit to $533 billion by 2013 by increases taxes to the rich, cutting spending in Iraq and Afghanistan and "reining in Medicare and other entitlement costs," per Politico. The NY Times reports that he will "propose to tax the investment income of hedge fund and private equity partners at ordinary income tax rates, which are now as high as 35 percent and could return to 39.6 percent under his plans, instead of at the capital gains rate, which is 15 percent at most" (Senator Charles Schumer has been one of the more vocal opponents of this plan in the past, but the Times points out "With Wall Street discredited and lucrative executive compensation a political target, the provision could prove more popular among lawmakers"). And here's the breakdown of how those making more than $250,000 will be affect, from the Washington Post:

Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.