President Obama outlined his plan for deficit reduction today, calling for $4 trillion to be cut over 12 years, with spending cuts and tax increases. And he blasted the Republicans' deficit-reduction plans (Rep. Paul Ryan's "Path to Prosperity") which include tax breaks to the rich and corporations, "In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. That’s who needs to pay less taxes? They want to give people like me a $200,000 tax cut that’s paid for by asking 33 seniors to each pay $6,000 more in health costs. That’s not right, and that’s not going to happen as long as I’m president."
Obama's plan involves "keeping domestic spending low; cuts to the Pentagon budget; health care savings in Medicare and Medicaid; and taxes." According to CNN, "The president claimed that by building on or adjusting the health care reform bill passed last year, $480 billion would be saved by 2023, followed by an additional $1 trillion in the following decade. For example, he proposed tightly constraining the growth in Medicare costs starting in 2018." Additionally, Obama wants to create a "debt fail-safe," which Politico reports, "would affect both spending and revenues if deficits don’t drop to an average of 2.8 percent of gross domestic product by the end of the decade. The automatic spending cuts would be fairly straightforward, but White House officials conceded that adjusting tax laws automatically would be more complex."
The president said, "Doing nothing on the deficit is just not an option... "our debt has grown so large that we could do real damage to the economy if we don't begin a process now to get our fiscal house in order." Naturally, Republicans like their plan better while Nobel Prize winner and sometime Obama critic Paul Krugman cooed, "Much better than many of us feared. Hardly any Bowles-Simpson — yay!"
