Some details of Obama's deficit-reduction plan

AP News
Posted: Apr 13, 2011 4:34 PM
Some details of Obama's deficit-reduction plan

Some details of President Barack Obama's deficit-reduction goals:



Obama proposes reducing the deficit by $4 trillion over 12 years, with $3 trillion coming from spending reductions and $1 trillion from additional revenue.

Without changes to current law, budget deficits will total $7 trillion over the next decade, the Congressional Budget Office projects. The deficit is the difference between the government's outlays and its income in a fiscal year.

The president wants to resurrect a "trigger" that would enact automatic spending cuts if deficits haven't stabilized by 2014.

The White House says $1 trillion in savings will come from reduced interest payments on the national debt.



Obama wants to squeeze significant savings out of the health care programs for the elderly, poor and disabled. That's on top of last year's health care bill, which cut $500 billion over 10 years from projected increases in Medicare spending.

The president's proposal Wednesday would cut at least $200 billion from Medicare over 10 years and $100 billion from Medicaid over 10 years.

The president lays out a mix of generalities and specifics on how to get there, including: empowering an independent advisory board to hold down growth in Medicare spending; seeking to use Medicare's bargaining power to hold down prescription drug costs; improving patient safety; and setting limits on Medicaid payments for certain medical devices.



The president says Social Security, the politically sacrosanct retirement program for older Americans, is not the cause of the country's deficits but that both parties should work together to strengthen it without putting current retirees at risk or "slashing benefits for future generations." He gave no specifics.



Obama proposes an overhaul of the tax system that would eliminate tax breaks and loopholes and even lower some tax rates, resulting in $1 trillion in additional revenue.

Obama also wants to allow Bush-era tax cuts to expire for individuals making $200,000 or more a year and couples making $250,000 or more. The revenue that would generate is not counted in his $4 trillion in deficit reduction because under existing law the cuts would expire on their own at the end of 2012.



Obama seeks to pare $400 billion from defense spending by 2023. The White House says he will work with Pentagon officials to identify specific cuts.



Obama is asking the Democratic and Republican leaders in the House and Senate to designate four members each to participate in negotiations led by Vice President Joe Biden, beginning in early May, to produce a legislative framework for comprehensive deficit reduction by the end of June.



Obama sought to draw clear distinctions between his plan and a proposal from House Republicans that cuts more deeply, achieving more than $5 trillion in savings over 10 years. Obama criticized the GOP for aiming to maintain tax cuts for the wealthy while cutting deeply into education, clean energy and transportation programs the president says must be preserved to ensure the country's competitiveness.

On health care, Obama would leave Medicare and Medicaid basically in their current form while Republicans would turn Medicaid into a block grant program for states and transform Medicare, beginning in 2022, by giving retirees a fixed amount of money to buy private insurance. The president said that "ends Medicare as we know it."