Last week, amidst debates over the FY 2011 stopgap funding measure and FY 2012 budget blueprint, President Barack Obama unveiled a plan to reign-in the federal deficit. In his speech at Washington, D.C.ís George Washington University on Wednesday afternoon, President Obama said his plan would reduce the deficit by $4 trillion in 12 years.
Obamaís framework would institute myriad spending cuts, including cuts to Medicare, defense spending, and a repeal of the 2001 and 2003 tax cuts on individuals earning more than $250,000 annually. Obamaís plan outlines a "debt failsafeĒ trigger that will cut federal spending if Congress doesnít. This trigger would go into effect if the federal deficit isnít on a declining path in terms of its share of GDP by 2014, and will institute across-the-board spending reductions. The goal of the debt failsafe is to ensure the deficit comprises less than 2.8 percent of GDP toward the end of this decade.
With regards to health care, Obama underscored his opposition to turning Medicare into a voucher system and instead pointed to cost-saving measures such as: strengthening the Independent Payment Advisory Board (IBAP) created under the Patient Protection and Affordable Care Act (PPACA); improving patient safety through the Partnership for Patients program; reducing unnecessary prescription drug spending; and improved accountability in Medicare Advantage payments. Obama estimated his reforms would save $340 billion over 10 years.
On the topic of tax reform, Obama reiterated his plan to allow the 2001 and 2003 tax cuts on top earners to expire. He also stated his support for the Presidentís Fiscal Commissionís efforts on tax reform to eliminate certain deductions in order to lower rates.
Obama went on to announce his request that Majority Leader Harry Reid (D-Nev.), House Speaker John Boehner (R-Ohio), Minority Leader Nancy Pelosi (D-Calif.) and Minority Leader Mitch McConnell (R-Ky.) each pick four Members from their caucuses to participate in deficit reduction discussions beginning in early May to be led by Vice President Joe Biden.
Often not included in debates over spending cuts, Obama said he will work to reduce security spending by holding the growth in base security spending to a rate below inflation, and working with Defense Secretary Robert Gates and Joint Chiefs Chairman Mike Mullen on coming up with defense cuts.
While Obama stated that he opposes drastic changes to Social Security ala privatization, he did open the door to making minor changes in order to accommodate the aging workforce.
Following the initial speech, Obama is now taking his message on the road and spoke to a group in Annandale, Va., this week and is set to address groups in several cities on the West Coast.
Please click here for more details on Obamaís proposal from the White House.