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9:22 AM / Saturday May 8, 2021

18 Apr 2011

Obama pivots, eyes Medicare changes, tax increases

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April 18, 2011 Category: Stateside Posted by:

By Jim Kuhnhenn

Associated Press

 

WASHINGTON – President Barack Obama, risking liberal anger and Republican scorn, is turning his attention to the nation’s crushing debt with an anti-deficit framework that tackles politically sensitive health care programs while also increasing taxes.

 

The president last Wednesday, delivered a speech outlining his approach to reducing the deficit by lowering spending in Medicare and Medicaid, raising taxes on the wealthy and cutting defense costs. Obama’s address will draw contrasts with a Republican plan that cuts $5 trillion in spending over the next decade and which the White House says unfairly singles out middle-class taxpayers, older adults and the poor.

 

This new clash, just a week after the president announced he would seek re-election, ensures that the nation’s fiscal health will be at the center of the 2012 presidential campaign. For the past two months, Obama has been arguing to protect his core spending priorities, including education and innovation. His turn to deficit reduction reflects the pressures he faces in a divided Congress and with a public increasingly anxious about the nation’s debt, now exceeding $14 trillion.

 

The president is wading into a potential political thicket. Liberals fear he will propose cuts in prized Democratic programs like Medicare and Medicaid, the health care programs for older adults, the disabled and the poor, and in Social Security. Moderates worry that his plan could unravel bipartisan deficit-cutting negotiations. And Republicans already are poised to reject any proposal that includes tax increases.

 

Key from the speech: What’s in Obama’s deficit reduction plan?

 

After largely staying on the sidelines during the fight over the deficit, President Obama today jumped headfirst into the fray, laying out a broad framework to reduce the federal budget gap by $4 trillion over the next 12 years.

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In a speech at George Washington University in Washington, D.C., Obama proposed what he called a “balanced approach,” a mix of spending cuts and tax increases “that puts every kind of spending on the table, but […] protects the middle class, our promise to seniors, and our investments in the future.” he said.

 

The plan contrasts with one released last week by Rep. Paul Ryan of Wisconsin, the Republican point man on budget issues. Obama derided Ryan’s approach as “less about reducing the deficit than it is about changing the basic social compact in America.”

 

Here’s what Obama called for in his “Framework for Shared Prosperity and Shared Fiscal Responsibility”:

 

  • One quarter of the deficit reduction to be achieved through tax increases, with the rest to come mostly from spending cuts–a split that the president’s liberal base may see as still too heavily tilted toward spending cuts
  • An end to the Bush tax cuts for the 2 percent of Americans making $250,000 or more
  • Tax reform aimed at closing loopholes that favor the rich, allowing for a lowering of overall rates, as recommended by the Bowles-Simpson deficit reduction commission
  • Cuts of $770 billion by 2023 to non-security discretionary spending, another Bowles-Simpson recommendation
  • Cuts of $400 billion to “security spending”–that is, defense–by 2023
  • A rejection of the Ryan budget’s approach to Medicare and Medicaid, which the White House believes would unfairly shift costs to seniors and the vulnerable while undermining both programs in the long term. Instead, Obama proposed reforms to reduce the growth of health care spending (beyond those in the overhaul last year) that would save $480 billion by 2023, and at least an additional trillion in the decade following
  • Cuts to other mandatory programs–the White House listed agricultural subsidies, the federal pension insurance system, and anti-fraud measures–worth $360 billion by 2023
  • A general effort to “strengthen Social Security for the long haul,” without slashing benefits for future generations
  • A “debt failsafe,” to kick in by 2014. If long-term deficit projections aren’t looking better by that time, the failsafe would trigger an across-the-board spending reduction (with exceptions for Social Security, low-income programs, and Medicare benefits)
  • The creation of a committee chaired by Vice President Joe Biden and including members of both parties and houses of Congress, to begin meeting next month in order to “agree on a legislative framework for comprehensive deficit reduction”

 

Obama was briefing Congress’ bipartisan leadership on the contents of his speech Wednesday morning in the Cabinet Room of the White House. Photographers captured the image of Obama, flanked by House Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., before the meeting got under way.

 

Republicans already were taking a dismissive tone. “If he were serious, he’d be talking about a detailed roadmap for action, not just grabbing headlines by announcing another speech,” Senate Republican leader Mitch McConnell said on Wednesday.

 

For the White House, the speech at George Washington University 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 it by midsummer would drive up the cost of borrowing and destroy the economic recovery.

 

His speech comes just before Congress votes on a $38 billion package of spending cuts that averted a government shutdown last week. Despite widespread antipathy toward the deal in both parties, House Republicans and the White House predicted the plan, which covers spending for the next six months, would pass.

 

As for the bigger, long-term deficit proposal, the White House was keeping a tight lid on details. But spokesman Jay Carney made clear the president would call for changes in Medicare and Medicaid. Obama also was expected to resurrect the tax increases on wealthy Americans that he put off in December as part of a tax deal with Congress. White House officials have also said the president intends to call for a reduction “tax expenditures,” the tax breaks and loopholes that lower tax revenue.

 

“He believes that there has to be a balanced approach” to reducing long-term deficits, Carney said.

 

The president’s proposal is meant to be in sharp contrast with the plan offered by House Budget Committee Chairman Paul Ryan., R-Wis. That budget proposal, embraced by the House Republican leadership, would reduce spending by more than $5 trillion over 10 years with structural overhauls to Medicare and Medicaid while also making permanent all Bush-era tax cuts.

 

Obama could face resistance from Democrats. Senate Majority Leader Harry Reid, D-Nev., on Tuesday reiterated his opposition to changes in Social Security.

 

Pablo Martinez Monsivais of AP and Yahoo News contributed to this story.

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