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Obama Unveils Roadmap for Reducing Deficit by $4 Trillion

President Obama officially unveiled his own proposal for reducing the national deficit Wednesday in a speech at George Washington University, calling for $4 trillion in cuts over the next 12 years through spending cuts and tax reform.

In response to Republican calls for reductions in entitlement spending, the president launched a defense of programs like Medicare and Medicaid:

Part of this American belief that we are all connected also expresses itself in a conviction that each one of us deserves some basic measure of security and dignity. We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff, may strike any one of us.

Mr. Obama praised the deficit reduction of the 1990s, blaming the later growth on higher spending, the wars in Iraq and Afghanistan and the economic recession:

We increased spending dramatically for two wars and an 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.

He also defended the use of federal stimulus money and blamed unexpected economic hardship for adding to the existing deficit:

We faced a terrible financial crisis and a recession that, like most recessions, led us to temporarily borrow even more. In this case, we took a series of emergency steps that saved millions of jobs, kept credit flowing, and provided working families extra money in their pockets. It was the right thing to do, but these steps were expensive, and added to our deficits in the short term.

The president painted a dire picture of the consequences of riding debt. “As the Baby Boomers start to retire in greater numbers and health care costs continue to rise, the situation will get even worse,” he said, adding that a higher deficit would cut investment, hurting job growth and crippling the economy in the long run.

He said the steeper cuts proposed by Republicans would come at too high a price, and too quickly. “The way this plan achieves those goals would lead to a fundamentally different America than the one we’ve known throughout most of our history,” he said.

“A serious plan doesn’t require us to balance our budget overnight – in fact, economists think that with the economy just starting to grow again, we will need a phased-in approach,” the president said.

He criticized the reluctance to impose changes in the tax code to wealthier Americans. He said the Republican proposal assumes that “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,” he said, later adding, “That’s not right, and it’s not going to happen as long as I’m president.”

He called for an examination of defense spending and “a fundamental review of America’s missions, capabilities and our role in a changing world.” The review would build on Defense Secretary Robert Gates’ existing proposals to cut some military spending deemed unnecessary.

President Obama anticipated strong opposition from Republicans to the proposal, as well as resistance from Democrats who are unwilling to make changes to those programs.

“To those in my own party, I say that if we truly believe in a progressive vision of our society, we have an obligation to prove that we can afford our commitments,” he said.

Vice President Joe Biden is expected to enter a series of negotiations with congressional leaders in coming months to work out a compromise, with the goal of making a deal by June.

Details of President Obama’s proposal are here.

Read the full GOP budget plan here.

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