The Federal Budget Crunch
Obama Plan Aims For $4 Trillion In Deficit Cuts
President Obama, under increasing pressure to address the nation's burgeoning debt, on Wednesday laid out a sweeping vision to cut government deficits by more than $4 trillion in 12 years through tax increases and spending cuts phased in over time.
In a speech at George Washington University in the nation's capital, Obama melded his progressive campaign rhetoric with presidential policy, rejecting Republican plans to remake Medicare and Medicare and proposing a mechanism that would trigger across-the-board spending cuts and tax increases if Congress fails to meet deficit-reduction targets.
And he said he's asked Vice President Biden to meet with congressional leaders to come up with a bipartisan deficit-reduction plan by June, about the time Congress will be asked to raise the government's $14.3 trillion debt ceiling.
"I know there are Republicans and Democrats in Congress who want to see a balanced approach to deficit reduction," Obama said.
Obama's proposals hewed closely, but not perfectly, with recommendations made months ago by his bipartisan deficit reduction commission but never acted on.
And he took direct aim at a plan by House Republicans that would fundamentally change the way the nation provides health care coverage to its elderly and poor citizens, drawing on history to make a case for committing to common cause for common good.
"More than citizens of any other country, we are rugged individualists, a self-reliant people with a healthy skepticism of too much government," he said.
"But there has always been another thread running throughout our history — a belief that we are all connected; and that there are some things we can only do together, as a nation."
Those include, he said, education, a strong military, public schools, scientific research, and transportation infrastructure — but also a safety net for the most vulnerable.
"We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff, may strike any one of us," he said. " 'There but for the grace of God go I,' we say to ourselves." And so, he said, Americans contribute to Medicare, Social Security and Medicaid.
"We are a better country," Obama said, "because of these commitments."
But it's those entitlement programs that are the drivers of the deficit, particularly at a time when the baby boom generation has begun to retire. Two-thirds of the nation's budget, Obama noted, is spent on entitlement programs and national security.
Republican Rep. Paul Ryan's recent budget blueprint calls for more than $6.2 trillion in spending cuts — many unspecified — over the next decade. Ryan, chairman of the House Budget Committee, has proposed repealing last year's health care overhaul legislation, turning Medicare into a voucher program, and Medicaid into a fixed block grant. Ryan also wants to cut the taxes rate for high earners and corporations.
The GOP-controlled House is expected to take up Ryan's proposal on Friday.
And it provided a reliable foil for Obama, who characterized the Wisconsin Republican's proposal as the wrong vision for the country.
Ryan's plan contains "worthy goals," the president said, in his prepared remarks. "But the way this plan achieves those goals would lead to a fundamentally different America than the one we've known throughout most of our history."
The White House estimates that up to 50 million Americans would lose their health insurance under the Ryan plan, and others would pay thousands more for coverage.
After Obama's speech, Ryan said he was "very disappointed in the president" and characterized the president's comments as partisan — a "political broadside from our campaigner in chief."
"We need leadership," Ryan said. "We don't need a doubling down on the failed policies of the past."
Obama sought to characterize his own framework as an effort to ensure that, in retirement, all Americans can still expect economic dignity and reliable health care.
A Skeptical Public
The president, like every other politician, also knows how to read polls. And the results of recent surveys also have many Republicans stepping back from Ryan's proposal: A Gallup Poll released this week, for example, shows that only 13 percent of all adults surveyed said they support a complete overhaul of Medicare.
Thirty-four percent say they support minor changes, but 27 percent — including 33 percent of Republicans surveyed — suggested that government should not try to control the program's cost.
"I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry," Obama said, "with a shrinking benefit to pay for rising costs."
"We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations," he said.
The White House says it expects to maintain Medicare and Medicaid programs as is but predicts it can find savings of $480 billion in those programs by 2023, and an additional $1 trillion over the following decade.
The savings, according to the administration, will come from "reducing waste, increasing accountability, and improving the quality of care."
It's the "bending the cost curve" argument that the administration included in its pitch for last year's health overhaul law, only at a more rapid pace, White House officials say.
On taxes, the president's framework assumes repeal of the Bush-era tax cuts for high earners, which in December were extended through 2012. The White House framework also anticipates about $1 trillion in additional tax revenue by eliminating tax carve-outs and deductions. Those include the current mortgage interest deduction and deductions for charitable contributions.
Obama offered no specifics on Social Security; neither does the House Republican plan.
A Decade Of Free Spending
Though the president took pains to characterize the current deficit issue as a bipartisan problem, he also noted that "America's finances were in great shape by the year 2000." That coincided with the end of Democratic President Bill Clinton's two terms in the White House.
"We went from deficit to surplus," he said. "America was actually on track to becoming completely debt-free, and we were prepared for the retirement of the baby boomers."
But a decade of war, he said, profligate spending, an expensive drug prescription program, and tax cuts "that went to every millionaire and billionaire in the country" have landed the nation in the fix it's in.
Though Obama has been criticized — inside the Beltway, anyway — for waiting too long to address the deficit, his plan appeared to balance the recommendations of the bipartisan commission and political reality. And Obama's plan provided some comfort to his progressive base, which has been calling on the president to defend programs for the nation's neediest and most vulnerable.
The Obama "framework" now joins the Ryan plan and the bipartisan commission report in the mix of proposals to address the deficit. A bipartisan group of six senators is working on another. And by June, if Biden has anything to say about it, there may be a fifth.
So there is no lack of plans. It's the action part that still remains uncertain. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.