Obama outlines $3 trillion debt plan; GOP slams new taxes

President Barack Obama has released his long-awaited debt reduction plan on Monday, outlining a roughly $3 trillion savings plan that is already facing a rocky reception among congressional Republicans.

The president's plan includes $1.5 trillion in new revenue generated largely by higher taxes on the wealthiest Americans - a proposal vehemently opposed by GOP leaders who insist any tax increase will undermine an already shaky economy.

"It is disappointing the president has nothing but a fresh slogan for the same job-killing small business tax hikes opposed by bipartisan majorities in Congress," said Michael Steel, a spokesman for House Speaker John Boehner, R-Ohio.

The release of Obama's blueprint is likely to set the stage for a fall dominated by harsh partisan debates over taxes and spending, as well as a 2012 presidential campaign focused on growing economic fears.

Under Obama's plan, $800 billion in revenue would be generated by allowing some of the Bush-era tax cuts for high-income households to expire - something the president has repeatedly called for.

An additional $400 billion would result from capping the value of itemized deductions and other exemptions for high-income households.

The remaining $300 billion would come from closing various tax loopholes, according to a senior administration official.

A new tax surcharge could also be imposed on millionaires - the so-called "Buffett Rule" - named after investor Warren Buffett, who argues that the richest Americans are not taxed enough.

Wealthier Americans often derive much of their income from investments, which are typically taxed at a lower rate than ordinary income such as wages. As a result, they can end up owing a lower percentage of their income in federal taxes than someone who makes less money, especially once payroll taxes are factored in.

The concept behind the Buffett Rule is that those earning more than $1 million should not be allowed to pay a lesser percent of their income in federal taxes than Americans lower down the income scale.

In terms of spending, Obama's plan incorporates $580 billion in mandatory cuts, including $248 billion from the politically popular Medicare program. Roughly 90% of those savings will come from reducing overpayments in the system, according to a senior administration official.

Any changes to Medicare benefits won't kick in before 2017, the official said.

The president will make clear he'll veto any debt reduction legislation that takes "one dime away from Medicare benefits without asking the wealthy to pay their fair share," the official stressed.