Obama goes on the offensive on deficit reduction


April 14, 2011 - 12:00 AM

President Obama joined with House Republicans yesterday to attack growing federal deficits and point the country toward fiscal balance.
“Join” isn’t the proper verb. The paths each would take to that goal go in opposite directions.
The Republican plan would end Medicare as we know it today by shifting costs from the government to the individual senior, would give huge new tax reductions to the wealthy and would greatly reduce spending on education, care for the disabled and would turn Medicaid into a block grant rather than a needs-based payment to the states from Washington.
Under the Republican proposals for debt reduction, federal funding of state-administered programs to bolster various segments of state econ-omies would drop, forcing the states to spend more or shrink those programs.
That’s how the GOP plan would reduce spending by $4 trillion. It would be, at base, a pervasive cost shift rather than a savings.
Obama proposes the same level of deficit reduction by taking income tax rates back to 2000 levels and adopting some of the tax reforms proposed by his fiscal reform commission last year. He would reduce the growth of health care costs by controlling payments to providers rather than requiring seniors to pay more. The Medicaid program, which pays for nursing home and assisted living care for the indigent elderly, would continue to be a joint state-federal responsibility.

IN HIS SPEECH to the students of George Washington University Wednesday, the president reminded them and the nation how the deficit grew to be so large so quickly.
“ …  after Democrats and Republicans committed to fiscal discipline during the 1990s (eliminated the deficit and produced a surplus) we lost our way in the decade that followed. We increased spending dramatically for two wars and added expensive prescription drug program — 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 — tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade. … To give you an idea of how much damage this caused to our national checkbook, consider this: In the last decade, if we had simply found a way to pay for the tax cuts and the prescription drug benefit, our deficit would currently be at low historical levels in the coming years.”
Then, poking sly fun at himself and all other politicians, he commented on the obvious: “ …  most Americans tend to dislike government spending in the abstract, but they like the stuff it buys. Most of us, regardless of party affiliation, believe that we should have a strong military and a strong defense. Most Americans be-lieve we should invest in education and medical research. Most Americans think we should protect commitments like Social Security and Medicare. And without even looking at a poll, my finely honed political skills tell me that almost no one believes they should be paying higher taxes.”
Then he turned serious:  “…  A 70 percent cut to clean energy. A 25 percent cut in education. A 30 percent cut in transportation. Cuts in college Pell Grants that will grow to more than $1,000 per year. That’s what they’re proposing. These aren’t the kind of cuts you make when you’re trying to get rid of some waste or find extra savings in the budget. These aren’t the kind of cuts that Republicans and Democrats on the Fiscal Commission proposed. These are the kind of cuts that tell us we can’t afford the America we believe in. And they paint a vision of our future that’s deeply pessimistic.
   “ … Worst of all, this is a vision that says even though America can’t afford to invest in education or clean energy; even though we can’t afford to care for seniors and poor children, we can somehow afford more than $1 trillion in new tax breaks for the wealthy. Think about it. In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. The top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes? They want to give people like me a two hundred thousand dollar tax cut that’s paid for by asking 33 seniors to each pay six thousand dollars more in health costs? That’s not right, and it’s not going to happen as long as I’m President.”

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