U.S. President Barack Obama revealed a $3 trillion debt reduction plan on Monday that will see the wealthiest Americans taxed higher and government spending cut.

The higher taxes targeting millionaires aim to generate $1.5 trillion in new revenue that will add up to the $1 trillion in savings projected under a debt ceiling deal enacted in August.

"Those who have done well -- including me -- should pay our fair share in taxes to the country that made our success possible," CNN quoted Obama as saying.

Under the plan, the government will allow tax cuts for high-income households imposed by the former administration to expire. For this, $800 billion is expected to be generated.

The plan will put a cap on deductions and exemptions for the same rich households to generate another $400 billion. Tax leaks will also be closed to raise another $300 billion.

A new tax plan called the Buffet Rule after the American magnate and philanthropist will target millionaires. The tax will be for their investment income, which is currently taxed lower than wages. This will make million-dollar earners pay taxes not lower than those earning lesser.

In the spending area, there will be a $280 million Medicare spending cut, particularly overpayments in the health insurance system. Another $72 billion in savings are to be generated in spending cuts for Medicaid and other health programs.
Lesser engagement of the military in Afghanistan and Iraq will generate another $1.1 trillion in savings. Limiting borrowings and annual budget shortfalls will generate interest savings of $430 billion.

Savings in the debt reduction plan will be used to implement the American Jobs Act Obama proposed last week by infusing $450 million in economic stimulus.

The debt plan drew opposition from Republicans, who claimed that hitting job creators will lead to the loss of more jobs.

"Veto threats, a massive tax hike, phantom savings and punting on entitlement reform is not a recipe for economic or job growth - or even meaningful deficit reduction," said Senate Minority Leader Mitch McConnell, R-Kentucky, according to CNN.