Obama: Cut spending, raise taxes on the wealthy

[April 14, 2011]  WASHINGTON (AP) -- President Barack Obama coupled a call for $4 trillion in long-term deficit reductions with a blistering attack on Republican plans for taxes, Medicare and Medicaid on Wednesday, laying down markers for a roiling debate in Congress and the 2012 presidential campaign to come.

Obama said spending cuts and higher taxes alike must be part of any deficit-reduction plan, including an end to Bush-era tax cuts for the wealthy. He proposed an unspecified "debt failsafe" that would go into effect if Congress failed to make sure the national debt would be falling by 2014 relative to the size of the overall economy.

"We have to live within our means, reduce our deficit and get back on a path that will allow us to pay down our debt," the president said in a speech at George Washington University a few blocks from the White House. "And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs and win the future."

Obama's speech was salted with calls for bipartisanship, but it also bristled with attacks on Republicans. They want to "end Medicare as we know it," he said, and to extend tax cuts for the wealthy while demanding that seniors pay more for health care.

"That's not right, and it's not going to happen as long as I am president," he vowed. Medicare serves 47 million seniors and disabled people.

Obama spoke to an audience that included Rep. Paul Ryan, R-Wis., author of the House Republican budget that drew repeated presidential scorn. The Budget Committee chairman later told reporters he had been excited to receive an invitation to the speech, believing the administration was extending an olive branch.

"Instead, what we got was a speech that was excessively partisan, dramatically inaccurate and hopelessly inadequate to addressing our country's pressing fiscal challenges," Ryan said. "What we heard today was not fiscal leadership from our commander in chief. What we heard today was a political broadside from our campaigner in chief."

Speaker John Boehner, R-Ohio, noted that the administration has asked Congress to raise the debt limit, but said, "the American people will not stand for that unless it is accompanied by serious action to reduce our deficit. More promises, hollow targets and Washington commissions simply won't get the job done."

The president spoke less than a week after he reached a compromise with Boehner on an unprecedented package of $38 billion in spending cuts for this year just in time to avoid a partial government shutdown. Both houses of Congress are expected to pass the measure in the next 24 hours or so, closing the books on the current budget year and clearing the way for a far more defining debate about the size and shape of the government.

Obama stepped to the podium at a juncture when tea party-backed Republicans are relishing early victories in the House, the 2012 Republican presidential field is just beginning to take shape and moderate Democratic lawmakers are charting their re-election campaigns in swing seats. His emphasis on deficit reduction marked an appeal to independents as well as other voters who are eager to stem record annual deficits as well as gain control over a national debt that is more than $14 trillion.

At the same time, he sought to keep faith with liberals and other supporters.

To opponents of revisions in Medicare, Medicaid or Social Security, he said, "I guarantee that if we don't make any changes at all, we won't be able to keep our commitments to a retiring generation that will live longer and face higher health care costs than those who came before."

Of $4 trillion in cuts, Obama said $2 trillion should come from spending, $1 trillion from overhauling the tax system to eliminate some tax breaks and loopholes, and the rest recouped from lower interest payments on the national debt

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.

Administration officials said military spending would be reduced by $400 billion through 2023, domestic programs would absorb $770 billion in cuts and mandatory programs such as agricultural subsidies another $360 billion.

An additional $480 billion would be saved from Medicare, which provides health care principally to 33 million seniors, and from Medicaid, a state-federal program that covers lower-income families and is ticketed for a huge expansion under the health care program Obama signed into law last year.

In line with the wishes of Senate Democratic leaders, the president made no recommendations for savings from Social Security, which he said is neither in a crisis nor "a driver of our near-term deficit problems." He said he supports unspecified steps to strengthen it for the long term, but ruled out any attempt to privatize it.

The president also urged Congress to pass tax changes, and he suggested he was open to curtailing a homeowners' tax deduction that can currently be claimed by filers at all income levels.

Obama's plan relied on some of the same deficit reduction measures proposed in December by a bipartisan fiscal commission he appointed. The president is scheduled to meet Thursday at the White House with the co-chairmen of the commission, Democrat Erskine Bowles and Republican Alan Simpson.

Neither Obama nor his aides distributed any detailed accounting of the effect of his recommendations on the deficit, which is expected to top $1.5 trillion this year, or the debt, now more than $14 trillion.

Obama saved some of his sharpest rhetoric for Republican proposals to end traditional Medicare for anyone currently under 55, and to give the states near-total control over Medicaid.

For Medicare, he said, "It says instead of guaranteed health care, you will get a voucher. And if that voucher isn't worth enough to buy insurance, tough luck -- you're on your own."

He said the Republican budget could cost 50 million Americans health care coverage in all, including grandparents needing nursing home care, children with autism and kids "with disabilities so severe that they require 24-hour care. These are the Americans we'd be telling to fend for themselves."

The debt has grown for much of the past few decades, with the exception of a brief period after President Bill Clinton and Republicans in Congress reached a compromise that permitted payments to reduce it.

Even a recounting of the debt's history had a political subtext.

Beginning in 2000, the president said, "we increased spending dramatically for two wars and an expensive prescription drug programs, but we didn't pay for any of this new spending. Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts." That was a reference to policies pursued by President George W. Bush and the Republicans who controlled Congress for six of his eight years in office.

Obama made a glancing reference to the 2012 presidential race, saying that some of his potential Republican rivals had signed onto the budget House republicans are advancing.

Former Massachusetts Gov. Mitt Romney, one likely GOP candidate, issued a statement that said Obama had "dug deep into his liberal playbook for solutions highlighted by higher taxes."

Another, former Minnesota Gov. Tim Pawlenty, said that with his speech, the president showed a "lack of seriousness on deficit reduction."

[Associated Press; By DAVID ESPO]

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