Obama to Make $4 Trillion Pitch to Cut Deficit
President Barack Obama will outline his vision for cutting approximately $4 trillion from the national deficit over the next 10 years in a Rose Garden speech Monday, according to senior administration officials familiar with the plan.
Obama’s framework is set to include $1.2 trillion in savings already identified in August’s debt ceiling deal, $580 billion in mandatory savings cuts, $1.1 trillion in savings from the troop drawdown in Afghanistan and Iraq, and $1.5 trillion in tax reform proposals.
Of the $580 billion in cuts to entitlement programs, $248 billion will come from Medicare and $72 billion will come from Medicaid or non-Medicare health-related savings, with no changes in retirement age planned and no beneficiary changes until 2017.
“Because it’s his vision and not a legislative compromise being crafted to garner some number of votes in the House and the Senate, it’s entirely different from the ‘grand bargain’ he was working on with the Speaker,” one top administration official said, referring to the two attempts to forge a compromise of $3 trillion to $4 trillion with Speaker John Boehner (R-Ohio) this summer.
“This is … the president’s vision,” another top aide added. “The president will make clear that he’s not going to support any plan that asks everything of some Americans, nothing of others. He will say he will veto any bill that takes one dime from the Medicare benefits seniors rely on without asking the wealthiest Americans and biggest corporations to pay their fair share.”
The administration officials noted, as Hill aides anticipated, that Obama’s speech will bear closer resemblance to an address he delivered at George Washington University in April on the nation’s burgeoning budget deficit than his speech to a joint session of Congress nearly two weeks ago or statements he made throughout a weeks-long battle with Republicans this summer to raise the government’s debt limit.
Although line-item details were not disclosed in the run-up to Monday’s Rose Garden address, it is clear that one of the most looked-at portions of Obama’s plan will be his recommendations on how to achieve $1.5 trillion in tax reform.
With the 12-member Joint Committee on Deficit Reduction tasked with finding $1.2 trillion to $1.5 trillion in savings by Thanksgiving and Congress long engaged in a divisive debate on tax policy, enacting tax reform likely would be Obama’s most significant challenge. Republicans are set in not raising taxes, and although GOP representatives on the super committee have expressed an initial openness to tax reform, most major budget negotiations this summer, including those between Boehner and Obama, broke down over revenues.
The White House is seeking to hit its $1.5 trillion target by saving $800 billion by eliminating the Bush-era tax cuts for the uppermost earners and $700 billion from other provisions that have been proposed recently in some iteration. Those include raising taxes on carried interest and cutting tax preferences for high-income households, tax breaks to oil and gas companies, and benefits to corporate jet owners.
“We didn’t think that just calling for tax reform and not putting details out there was sufficient in the environment we’re in, and we’re putting out a list of specifics, which we would hope would jump-start the process,” a senior administration official said.
The official added that the tax reform provisions would seek to “boost job creation and growth” and would be designed to comply with what White House insiders have come to call the “Buffett Rule,” named after business mogul Warren Buffett and meaning that millionaires and billionaires will pay their “fair share” of the nation’s revenues burden.
Appearing on NBC’s “Meet the Press” on Sunday, Senate Minority Leader Mitch McConnell said means-tested benefits will need to be part of making entitlement programs solvent in the long term. But the Kentucky Republican added that raising taxes at this point is a non-starter.
“With regard to his tax rate, if [Warren Buffett is] feeling guilty about it, I think he should send in a check. But, we don’t want to stagnate this economy by raising taxes,” McConnell said. “We’ve got a 9.1 percent unemployment rate. Does anybody think that’s a good idea other than the president? There’s bipartisan opposition to what the president is recommending already.”
On Capitol Hill, it’s unclear how seriously Obama’s speech will be received. Even Congressional Democrats were not given much advance notice, and the super committee’s job of finding at least $1.2 trillion in savings is difficult enough without voices from the White House tipping the delicate balance Democrats and Republicans must strike to avoid serious across-the-board discretionary cuts.
“It’s more of a box-checker than a game-changer,” one Democratic leadership aide said of Obama’s speech when asked how it might affect the super committee’s work, adding that any influence the president would have on the group likely would come in concert with advice from Congressional leadership.
When Obama addressed a joint session of Congress on Sept. 8, he emphasized that his plan would present long-term solutions and encompass a balanced approach.
“I’ll be releasing a more ambitious deficit plan — a plan that will not only cover the cost of this jobs bill but stabilize our debt in the long run,” Obama said in that speech.
“This approach is basically the one I’ve been advocating for months,” he added. “In addition to the trillion dollars of spending cuts I’ve already signed into law, it’s a balanced plan that would reduce the deficit by making additional spending cuts, by making modest adjustments to health care programs like Medicare and Medicaid, and by reforming our tax code in a way that asks the wealthiest Americans and biggest corporations to pay their fair share.”