Obama Pushes $4.4 Trillion Deficit Plan
President Barack Obama outlined his vision for cutting $4.4 trillion from the national deficit over the next 10 years in a Rose Garden speech today, laying the groundwork for this fall’s debate on spending and tax reform.
Obama called on Congress yet again to pass his $447 billion jobs plan and said he believes that by recommending ways to pay for the legislation, as well as ways to reduce the deficit long term, he is providing lawmakers with a bill they can pass “right away.” However, Members of Congress in both parties have suggested approving the plan en masse would be nearly impossible.
“I’m ready to sign a bill. I’ve got the pens all ready. Congress should pass this bill knowing that every proposal is fully paid for. The American Jobs Act will not add to the nation’s debt,” Obama said. “This is important because the health of our economy depends on what we do right now. … Washington has to live within its means — we have to cut what we can’t afford to pay for what really matters.”
The president’s framework includes $1.2 trillion in savings already identified in August’s debt ceiling deal, $580 billion in mandatory savings cuts, $1.1 trillion in savings from the troop drawdown in Afghanistan and Iraq and $1.5 trillion in tax reform proposals.
Of the $580 billion in proposed cuts to entitlement programs, $248 billion would come from Medicare and $72 billion will come from Medicaid or non-Medicare health-related savings, with no changes in retirement age planned and no beneficiary changes until 2017.
In a carrot to Congressional Democrats who likely will feel uneasy about entitlement reform, Obama emphasized his desire to protect health benefits for seniors and Social Security. He also took a dig at Speaker John Boehner (R-Ohio), lamenting that the two men were unable to reach a “grand bargain” as Obama “had hoped” during the summer’s negotiations to raise the debt ceiling, and quoted Boehner from an economic address the Republican delivered last week saying his proposals do not ask enough of America’s wealthiest to contribute more in revenues.
“That’s not smart, not right,” Obama said.
The president said he would veto any bill that presented “a one-sided deal that hurts the folks that are the most vulnerable” by implementing serious cuts to Medicare or Medicaid without also including revenue reform that levies higher taxes from the wealthiest Americans.
“This is not class warfare; it’s math,” Obama noted, in the face of criticism his White House is trying to stoke class divisions to move his plan forward.
In the runup to Obama’s speech Sunday, senior administration officials focused on the president’s intent to lay out his “vision,” as opposed to present ideas the White House floated during this summer’s bipartisan talks. While this might mean Obama has set down a clearer marker of where he stands on deficit reduction — especially as the Joint Committee on Deficit Reduction is trying to produce a plan to slash at least $1.2 trillion by Thanksgiving — it likely won’t be the platform for compromise to pass a bill anytime soon.
Perhaps the most important piece of Obama’s address, from the White House’s perspective, was Obama’s recommendations on how to achieve $1.5 trillion in tax reform. But enacting a rewrite of the tax code likely would be Obama’s most significant challenge, despite the fact that the super committee has the leeway to attempt such a feat. Republicans are set on not raising taxes, and although GOP representatives on the super committee have expressed an initial openness to tax reform, most major budget negotiations this summer, including those between Boehner and Obama, broke down over revenues.
The White House is seeking to hit its $1.5 trillion target by allowing the Bush-era tax cuts for the uppermost earners to expire and eliminating tax loopholes and other special interest provisions from the tax code. That includes raising taxes on carried interest and cutting tax preferences for high-income households as well as eliminating tax breaks to oil and gas companies and benefits to corporate jet owners.
“We didn’t think that just calling for tax reform and not putting details out there was sufficient in the environment we’re in, and we’re putting out a list of specifics, which we would hope would jump-start the process,” a senior administration official said Sunday evening.
The official added that the tax reform provisions would seek to “boost job creation and growth” and would be designed to comply with what White House insiders have come to call the “Buffett Rule,” named after billionaire business mogul Warren Buffett. Buffett, along with many Democrats, has argued the rich should pay their “fair share” of the nation’s revenues burden.
By giving an easily digestible brand to its tax reform approach, the White House is certainly trying to make a difficult policy issue easier to understand politically in an attempt to shore up its case with voters frustrated by a sputtering economy.
In a statement sent moments after the president finished speaking, Senate Minority Leader Mitch McConnell (R-Ky.) dismissed Obama’s proposals. “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. The good news is that the Joint Committee is taking this issue far more seriously than the White House,” McConnell said.