President Obama released on Monday a detailed plan to reduce the federal deficit by more than $3 trillion over the next ten years and pay for the jobs bill he introduced last week. It would raise $800 billion in revenues by allowing the Bush tax cuts to expire for the nation’s top earners, $700 billion from closing “wasteful” tax loopholes and $1.1 trillion from ending the wars in Iraq and Afghanistan. The plan also calls for $248 billion in savings from Medicare, 90 percent of which would come from reducing overpayments to providers, and $72 billion in Medicaid savings.
Speaking from the Rose Garden, Obama said that tax cuts for the wealthy, the cost of two wars and a recession turned a budget surplus into a “yawning” deficit and “a big pile of IOUs.”
“Washington has to live within its means. The government has to do what families across this country have been doing for years. We have to cut what we can’t afford, to pay for what really matters,” the president said.“We need to invest in what will promote hiring and economic growth now, while still providing the confidence that will come with a plan that reduces our deficits over the long term.”
Obama also said that those principles were at the heart of the “grand bargain” he offered Republican congressional leaders “that would have strengthened our economy instead of weaken[ing] it” during the debt-ceiling negotiations, but was rejected.
“What we agreed to wasn’t all that grand, but it was a start,” Obama said, adding that his budget proposal finishes what lawmakers started last summer, and that fairly achieves savings.
“I’m proposing real cuts to spending.These would be among the biggest cuts in our history. This plan eliminates taxloopholes that primarily go to the largest corporations,” he said. “We can’t afford these special lower rates for the wealthy — rates, by the way, that were meant to be temporary."
Obama also vowed that he would not support any plan that places a greater burden on ordinary Americans than it does on wealthy individuals and corporations.
The plan, which calls for two dollars in savings for every dollar spent, is sure to elicit extremely negative reactions from Republican congressional leaders, who quickly dropped the conciliatory tones first adopted when Obama initially unveiled the jobs bill. Majority Leader Eric Cantor on Friday sent a memo to the Republican conference outlining “areas of common agreement, and areas worthy of further conversation where agreement — assuming there are good faith discussions — may be possible.” They include incentives for hiring veterans, unemployment insurance reforms, infrastructure spending and payroll tax relief. An area where it will be “harder to find common ground”is in the call for tax increases.
House Speaker John Boehner, in a speech at the Economic Club in Washington last Thursday, nixed the idea of tax increases and said that they are not an option.
Several Republicans, including House Budget Committee Chairman Paul Ryan, say that Obama’s proposal to eliminate the Bush tax cuts for the wealthy is “class warfare,” which the president noted in his speech.
“This is not class warfare,” he said. “It’s math.”
(Photo: AP/Jim Watson, Pool)
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