*Taking a stand against Republican budget-cutting plans, President Barack Obama today proposed lowering the nation’s future deficits by $4 trillion over 12 years and promised he would not allow benefit cuts for the poor and the elderly to pay for tax breaks for the rich.
“That’s not right and it’s not going to happen as long as I’m president,” Obama declared in his speech at George Washington University.
While the president recommended trimming health care costs in Medicare and Medicaid, he also called for cuts in defense, an overhaul of the tax system to eliminate many loopholes enjoyed by individuals and corporations, and an end to Bush-era tax cuts for wealthier Americans.
“We have to live within our means, we have to reduce our deficit, and we have to get back on a path that will allow us to pay down our debt,” Obama said.
Obama laid the blame for the rising debt on the spending increases and tax cuts enacted during the presidency of George W. Bush and the recession that struck in late 2007. “We lost our way,” he said.
Ensuring that the nation’s fiscal troubles will be at the center of the 2012 presidential election, Obama drew sharp contrasts with a Republican plan that cuts about $5.8 trillion in spending over the next decade and which the White House says unfairly singles out middle-class taxpayers, older adults and the poor. He even pointed out that the GOP plan has already been embraced by some Republican presidential candidates.
Such cuts, he said, “paint a vision of our future that’s deeply pessimistic.”
“Their vision is less about reducing the deficit than it is about changing the basic social compact in America,” Obama said, as the author of the Republican plan, House Budget Committee Chairman Paul Ryan, sat in the front row of the university auditorium.
To help enforce budget discipline, the president called for resurrecting a spending cap that would be triggered if the nation’s debt did not stabilize and begin to decline by 2014. The cap would not apply to Social Security, low-income programs or Medicare benefits.
The president’s plan, outlined in this seven-page White House fact sheet, draws many of its ideas from the December recommendations of Obama’s bipartisan fiscal commission, which proposed $4 trillion in deficit reduction over 10 years. As in the commission’s plan, three quarters of the deficit reduction would come from spending cuts, including lower interest payments as the debt eases. One quarter, or $1 trillion, would come from additional tax revenue.
For the White House, the speech comes as Obama pushes Congress to raise the limit on the national debt, which will permit the government to borrow more and thus meet its financial obligations. The country will reach its debt limit of $14.3 trillion by May 16. The Treasury Department has warned that failure to raise the limit by midsummer would drive up the cost of borrowing and destroy the economic recovery.
- Obama’s proposal calls for cutting $770 billion from non-defense domestic spending by 2023. That figure does not include spending on major benefit programs like Medicare, Medicaid and Social Security. The plan also would reduce defense spending by $400 billion during the same 12 years.
- Obama envisions spending cuts in Medicare and Medicaid of $480 billion through 2023. Those are in addition to the $500 billion in reductions over 10 years from projected increases in Medicare spending contained in the health care law Congress passed and Obama signed last year.
- The president’s planned health care reductions include proposals to lower Medicaid costs and reduce Medicare prescription drug expenses.
- While the White House concedes that Social Security is facing pressure from an aging population, Obama did not specify any changes to the national retirement system other than calling for bipartisan efforts to “strengthen the program.”
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