April 14, 2011 in Nation/World

Deficit pitch sets up fight

Obama’s proposal draws quick Republican criticism
Margaret Talev, David Lightman And Kevin G. Hall McClatchy
 
Associated Press photo

President Barack Obama outlines his fiscal policy during an address Wednesday
(Full-size photo)

WASHINGTON – Offering up his own $4 trillion road map to tame America’s deficit and an admission that he doesn’t expect Congress to embrace it as is, President Barack Obama on Wednesday began a concerted effort to pull together a bipartisan deal this year.

Obama’s plan, a mix of $3 in spending cuts for every $1 in tax increases to shave $4 trillion from deficit spending over the next dozen years, comes on the heels of Republicans’ “path to prosperity” proposal that would cut $4.4 trillion from deficit spending over 10 years but offer a more radical downsizing of government including the Medicare and Medicaid programs.

Republicans quickly derided Obama’s proposal as partisan and disappointing.

“When the president reached out to ask us to attend his speech, we were expecting an olive branch,” said House Budget Committee Chairman Paul Ryan, R-Wis. “Instead, his speech was excessively partisan, dramatically inaccurate and hopelessly inadequate to address our fiscal crisis.”

House Republicans plan to vote Friday on their alternative to the Obama plan.

The high-stakes policy and political battle now under way reflects the dangerous levels of national debt – nearing $14.3 trillion and growing – as well as public concern over the issue and a looming political test of wills over raising the nation’s debt ceiling before the federal government defaults on its obligations to its creditors.

While economists and independent budget experts criticize both parties’ plans as thin on details, they said the parameters of the national debate are now taking shape.

The president, in a speech at George Washington University, called on Congress to agree to some variation of his plan by the end of June. He also accused Republicans of plotting to gut the “basic social compact” of entitlement programs such as Medicare, Medicaid and Social Security under the auspices of fiscal responsibility.

To hit his new deficit-reduction target of $4 trillion by 2023, Obama would raise $1 trillion in new tax revenue from wealthy individuals. He’d also end the Bush-era tax cuts for the top 2 percent of American earners – but not the middle class – at the end of next year. Republicans say they won’t support tax increases.

Obama also suggested a “debt fail-safe” mechanism to automatically trigger across-the-board spending cuts starting in 2014 if the projected ratio of debt to GDP is too high. It would not apply to Social Security, Medicare or programs for low-income Americans.

Obama didn’t call for any major changes to Medicare, such as raising the eligibility age as some in the GOP have.

Instead, he anticipated efficiencies from last year’s health care overhaul and proposed empowering an independent advisory board to act more aggressively than originally envisioned to bring down Medicare costs. He also said Medicare should be able to reduce spending on prescription drugs.

Obama also didn’t propose any reductions to Social Security benefits.

Overall, the president’s new proposal represents a tripling of deficit reduction over what he unveiled just weeks ago with his 2012 budget plan.

Sen. Orrin Hatch, R-Utah, described Obama’s plan as a “do-over” attempt: “This time he was going to convince Americans that he is really, really serious about deficit reduction,” Hatch said with sarcasm.

The Republican plan, by Ryan of Wisconsin, is expected to attract few if any Democrats’ votes Friday and probably will go nowhere in the Democratic-majority Senate.

Obama is betting Americans will reject the Ryan plan as well, and that such a debate over the future of Medicare could hurt Republicans and thus bolster him in his re-election campaign.

“Their vision is less about reducing the deficit than it is about changing the basic social compact in America,” Obama said in his speech.

“I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry with a shrinking benefit to pay for rising costs.”

The president also says Congress should trim another $770 billion in nonsecurity discretionary costs, $360 billion from spending on programs such as agricultural subsidies and pension insurance, and $400 billion in security spending.

Vice President Joe Biden and bipartisan congressional leaders are to begin meeting next month at Obama’s request to try to agree on a bipartisan reduction plan by the end of June. The debt-ceiling vote is likely to face a July deadline.

A group of six senators, three from each party, has been meeting for weeks to discuss a long-term budget plan. They are said to be close to an agreement; it’s unclear if their effort would be merged into Obama’s initiative.

Republicans, including Sen. Rob Portman, R-Ohio, who served as budget director for George W. Bush, criticized Obama’s plan as too light on specifics. But Rep. Sander Levin, D-Mich., the top Democrat on the House Ways and Means Committee, said the president had set up a framework that allowed the two parties to negotiate.

“I don’t expect the details in any final agreement to look exactly like the approach I laid out today,” Obama said, but “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.”

Rep. Mike Ross, D-Ark., the co-chairman of the moderate Blue Dog coalition of Democrats, said he’s “encouraged” by Obama’s approach and thought some bipartisan compromise on deficit reduction can be enacted this year.

Republicans returned from a meeting at the White House with Obama before his speech saying they’re all for cooperation but won’t consider any tax increases.

House Speaker John Boehner, R-Ohio, said Obama “heard us loud and clear: If we’re going to resolve our differences and do something meaningful, raising taxes will not be part of that.”

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