Obamafs Debt Plan
Sets Stage for Long Battle Over Spending
Published: April 13, 2011 - New York Times
WASHINGTON — President
Obama made the case Wednesday for slowing the rapid growth of the national
debt while retaining core Democratic values, proposing a mix of long-term
spending cuts, tax increases and changes to social welfare programs as his
opening position in a fierce partisan budget battle over the nationfs fiscal
challenges.
After spending months on the sidelines as Republicans laid out their plans,
Mr. Obama jumped in to present an alternative and a philosophical rebuttal to
the conservative approach that will reach the House floor on Friday. Republican
leaders were working Wednesday to round up votes for that measure and one to
finance the government for the rest of the fiscal year.
Mr. Obama said his proposal would cut federal
budget deficits by a cumulative $4 trillion over 12 years, compared with a
deficit reduction of $4.4 trillion over 10 years in the Republican plan. But the
president said he would use starkly different means, rejecting the fundamental
changes to Medicare
and Medicaid
proposed by Republicans and relying in part on tax increases on affluent
Americans.
The president framed his proposal as a balanced alternative to the Republican
plan, setting the stage for a debate that will consume Washington in coming
weeks, as the administration faces off with Congress over raising the national
debt ceiling, and into next year, as the president runs for re-election.
Mr. Obama named Vice President Joseph
R. Biden Jr. to lead the negotiations with Congress, which the
administration hopes will produce the outlines of a deal by the end of June,
though a detailed agreement might have to await the outcome of the 2012
election. Mr. Biden played a similar role in talks that averted a government
shutdown at the 11th hour, over issues far less thorny than those on the table
now.
In a 44-minute speech to an audience at George
Washington University that included Representative Paul
D. Ryan of Wisconsin, the author of the Republican plan, Mr. Obama was often
combative and partisan, saying the Republican approach would hurt the elderly by
driving up the cost of medical care, deprive millions of health insurance and
starve the nation of investments in its future.
gThese are the kind of cuts that tells us we canft afford the America that I
believe in,h he said. gI believe it paints a vision of our future thatfs deeply
pessimistic.h
gTherefs nothing serious about a plan that claims to reduce the deficit by
spending a trillion dollars on tax cuts for millionaires and billionaires,h the
president continued, as Mr. Ryan sat stone faced. gTherefs nothing courageous
about asking for sacrifice from those who can least afford it and donft have any
clout on Capitol Hill.h
Yet Mr. Obama acknowledged that the rising medical costs and the mounting
debt required action. And he warned Democrats that his administration would have
to cut cherished programs and strictly limit the growth of Medicare and
Medicaid. gIf we truly believe in a progressive vision of our society,h he said,
gwe have the obligation to prove that we can afford our commitments.h
Mr. Obama said he would meet his $4 trillion deficit-reduction target by
cutting spending across a range of government programs, from farm subsidies to
federal pension insurance.
He called for cutting $400 billion more in military spending — twice what his
defense secretary, Robert
M. Gates, told Congress was the largest cut he could recommend.
In a sign of the tensions the plan may cause within the administration,
officials at the Pentagon said Mr. Gates was not told of Mr. Obamafs proposal
until Tuesday. In a statement, a Pentagon spokesman, Geoff Morrell, said that
gfurther significant defense cutsh would reduce the militaryfs capability. gIt
is important that any reduction in funding be shaped by strategy and policy
choices, and not be a budget math exercise,h Mr. Morrell said.
Republicans criticized the plan, both for the cuts in military spending and
for what they said was an overall lack of detail.
gRepublicans, led by Chairman Ryan, have set the bar with a jobs budget that
puts us on a path to paying down the debt and preserves Medicare and Medicaid
for the future,h Speaker John
A. Boehner said in a statement. gThis afternoon, I didnft hear a plan to
match it from the president.h
Mr. Boehner repeated a threat to refuse to raise the $14.3 trillion ceiling
on the national debt, which the government is likely to breach in early July,
unless the administration agrees to rein in spending and deficits. The
administration has sought to keep the debt ceiling issue separate from the
broader budget debate, and Mr. Obama addressed it only indirectly on Wednesday.
gIf our creditors start worrying that we may be unable to pay back our
debts,h Mr. Obama said, gthat could drive up interest rates for everyone.h
Still, in what some analysts said was a gesture to Republicans, Mr. Obama
said his plan would contain a trigger to require across-the-board spending cuts
if, by 2014, the federal debt was still projected to be rising as a percentage
of the total economy.
The trigger would apply not only to spending but also to what the
administration calls gtax expendituresh — essentially payments to taxpayers for
deductions for charitable donations or home mortgages.
The use of the phrase gtax expendituresh allows the administration to lump
tax-related issues into the spending category. Mr. Obama was more direct in his
call for allowing the Bush-era
tax cuts for higher-income Americans to expire in 2012.
The president agreed to extend the cuts last December, as part of a budget
deal with the newly elected Republican majority in the House. Now, with the
economy getting back on its feet, Mr. Obama attacked the demand by Republicans
to make the lower tax rates permanent as emblematic of their plan to enrich the
wealthy on the backs of the elderly and poor.
gThey want to give people like me a $200,000 tax cut thatfs paid for by
asking 30 seniors to each pay $6,000 more in health costs? Thatfs not right, and
itfs not going to happen as long as I am president,h Mr. Obama said, his only
line that drew applause.
While Mr. Obamafs plan does not detail specific cuts, analysts said it
offered enough detail to set off a substantive debate with Republicans. Some
said the proposal for capping the annual cost increase in Medicare and Medicaid
to just above the economic growth rate was surprisingly conservative. Others
said they were pleased that Mr. Obama had called for overhauling Social
Security, even if he was vague and said it was not a leading culprit for the
deficit.
gIt looks like Ryan smoked him out, so to speak,h said Rudolph G. Penner, a
senior fellow at the Urban Institute.
Mr. Penner said Mr. Obamafs plan hewed closely to the recommendations of his
commission on deficit reduction. Mr. Obama did not explicitly endorse those
recommendations when the commission submitted its report in December — a
decision that fueled criticism from Republicans and some Democrats that he was
not facing up to the tough choices in the budget debate.
The co-chairmen of that commission — Erskine
B. Bowles, who was a chief of a staff to President Bill
Clinton, and former Senator Alan
K. Simpson — were in the audience Wednesday, along with Mr. Biden. At one
point, Mr. Biden appeared to nod off, closing his eyes for 30 seconds.
Jackie Calmes, John Harwood and Thom Shanker contributed reporting.