President Barack Obama on Wednesday proposed cutting the deficit by $4 trillion over the next 12 years and called for bipartisan talks to reach a debt deal to finish by the end of June.
Obama harshly criticized the fiscal 2012 budget resolution written by House Budget Chairman Paul Ryan (R-Wis.) while offering his most substantive debt-reduction proposal to date after largely standing pat in his own fiscal 2012 budget request this year.
Obama ripped Ryan’s budget for forcing seniors and the poor to pay more for their health care while giving an additional tax cut to the wealthiest Americans.
“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 it’s not going to happen as long as I’m president,” Obama said.
He painted a vision of grandparents being kicked out of nursing homes and poor kids losing their health insurance if Ryan’s cuts are enacted.
“This is a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit,” Obama said.
He particularly targeted Ryan’s proposal to privatize Medicare for anyone age 55 and younger. The plan would provide seniors with federal subsidies to purchase private insurance plans.
“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,” he said.
Obama instead called for shared sacrifice and for requiring the wealthy to pay more in taxes, in addition to cutting spending.
Obama’s blueprint, which builds off of the proposal of his National Commission on Fiscal Responsibility and Reform, includes $2 trillion in spending cuts, $1 trillion from shrinking tax deductions and $1 trillion from reduced interest payments.
The tax reform package would reduce deductions and tax expenditures enough to simultaneously lower tax rates and generate more revenue to cut the deficit, Obama said.
The spending cuts include $750 billion by squeezing domestic discretionary spending, several hundred billion from defense, and cuts from payments to drug companies and new efficiencies in Medicaid.
Obama also said Social Security should also be shored up for future generations, but without slashing benefits.
He proposed a debt trigger that would require the level of debt as a percentage of the economy to start dropping by 2014 or else additional spending cuts and cuts to tax deductions would automatically take place.
Obama said bipartisan negotiations led by Vice President Joseph Biden would begin in early May and should finish by the end of June.
That’s near the drop-dead time for increasing the federal debt limit and avoiding a potentially catastrophic debt default
But even before Obama’s speech, Republican leaders rejected his call for higher taxes on anyone.
If they don’t ultimately support a tax reform package that lowers tax rates while raising revenues as part of a final deal, it’s not clear how a compromise will emerge.