President Obama’s Plan For Reducing America’s Long-Term Deficit:
Shared Responsibility and Shared Prosperity
Posted April 14, 2011
President Obama has proposed a balanced approach to secure $4 trillion in deficit reduction, incorporating the values of shared responsibility and shared prosperity. The President’s approach draws on the recommendations of the Bipartisan Fiscal Commission and adds to the $1 trillion in deficit reduction included in the President’s 2012 budget.
At the same time, unlike the budget proposed and passed by House republicans, the President will defend the middle class, protect America’s commitments to our senior citizens, and make the kinds of targeted investments we need to support economic and job growth.
The first step in President Obama’s balanced approach is to ensure annual domestic spending levels remain low. The bipartisan budget agreement achieved in April 2011 included the largest one-year reduction in spending in history, while maintaining investments in growing America’s economy and the next generation of American’s. President Obama’s approach would add to those savings in the years to come, a step that will save approximately $770 billion over 12 years.
The second step in President Obama’s approach is to identify more savings in the defense budget. Defense Secretary Gates has bravely taken on wasteful defense spending, and we’ve already secured significant savings. However, under the President’s budget, the federal government will find an additional $400 billion in security savings by 2023 while guaranteeing America’s capacity to maintain our national security.
The third step in President Obama’s approach is to cut healthcare spending. Unlike the republican plan, the President refuses to shift costs to seniors and low income families and privatize Medicare. Instead, his budget will reduce the cost of health care itself by building off of the Affordable Care Act with new reforms aimed at reducing health care spending while making Medicare and Medicaid stronger. Those reforms will keep America’s commitment to all our citizens and save taxpayers approximately $480 billion by 2023, and another one trillion dollars in the following decade. Wisconsin Representative Paul Ryan, the author of the House-approved budget, would end the federal government’s responsibility to provide healthcare for seniors under the current Medicare system opting instead to have taxpayer dollars be used to provide subsidies to buy private insurance policies. President Obama correctly refuses to support the measure.
The fourth step in President Obama’s approach is to reform the tax code. He proposes:
- Ending the tax cuts for the wealthiest two percent of Americans. If allowed to stand, those cuts – which even Republican presidential candidate John McCain voted against twice in 2001 and 2003 – would add approximately $830 billion to the deficit over the next decade, according to the Center for American Progress. To put that in perspective, $830 billion is enough to pay for the Veteran’s Affairs health system, the Coast Guard, the Food and Drug Administration and the maintenance of every single national park over the next ten years and still have an additional $100 billion left over.
- Ending tax breaks for U.S. companies’ overseas income, which would result in an additional $129 billion over the next decade.
- Limiting itemized deductions for the wealthiest 2% of Americans – a reform that would cut the deficit by $320 billion over a decade.
- Allowing small businesses – the engine of the American economy – new tax breaks
Finally, President Obama aims to enact a “debt failsafe” trigger that would guarantee a decline in the debt as a share of the economy. If that target isn’t met by 2014, there would be automatic spending cuts, both in direct spending and in spending through the tax code.
This is President Obama’s vision for America: “A vision where we live within our means while still investing in our future, where everyone makes sacrafices, but no one bears all the burden, where we provide a basic measure of security for our citizens and we provide rising opportunity for our children.” President Barack Obama, April 2011 address on the deficit and debt.