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Obama Unveils Plan to Save $4 Trillion via Spending Cuts, Tax Reform

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:

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    The deficit battle in Washington was fully joined today, as President Obama laid out his ideas.

    NewsHour congressional correspondent Kwame Holman begins our coverage.



    The president took the stage at George Washington University in Washington and called for cutting the deficit by $4 trillion over 12 years.


    It's an approach that achieves about $2 trillion in spending cuts across the budget. It will lower our interest payments on the debt by $1 trillion. It calls for tax reform to cut about $1 trillion in tax expenditures — spending in the tax code. And it achieves these goals while protecting the middle class, protecting our commitment to seniors and protecting our investments in the future.


    To get to the total, the Obama plan would end tax breaks first instituted by President Bush, for households earning more than $250,000 a year, look for up to $400 billion in new defense spending cuts, reduce domestic discretionary spending by $770 billion, and exact $480 billion in fresh savings from Medicare and Medicaid.

    The plan outlined by the president today came two months after the release of his 2012 budget proposal. That blueprint did little to address entitlements, prompting Republicans to accuse Mr. Obama of failing to lead. Today, they portrayed his speech as a do-over.

    The president gave congressional leaders a personal preview of the speech at the White House this morning. But Republicans emerged as cool to his plan as they had been going in, especially to tax hikes.

    REP. JOHN BOEHNER, R-Ohio, speaker of the House: I think the president heard us loud and clear. If we're going to resolve our differences and do something meaningful, raising taxes will not be part of that.


    Mr. Obama anticipated those objections in his speech.


    Some will argue we should not even consider — ever, ever — raising taxes, even if only on the wealthiest Americans. It's just an article of faith to them.

    I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more.


    The president's overall strategy today was to draw a sharp contrast to Republican ideas, especially to last week's proposal by Paul Ryan, chair of the House Budget Committee.

    He called for reductions of more than $5 trillion over 10 years, well beyond the Obama numbers. Ryan would revamp Medicare by paying private health plans, instead of reimbursing doctors and hospitals directly. And the GOP also would transform Medicaid into block grants, giving governors less money but more flexibility in caring for the poor and disabled.

    The president insisted those changes would end Medicare and Medicaid, not strengthen them.


    I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves.


    Congressman Ryan rejected that criticism.

    REP. PAUL RYAN, R-Wis., Budget Committee chairman: I'm very disappointed in the president.

    I was excited when we got invited to attend his speech today. I thought the president's invitation of Mr. Camp, Mr. Hensarling and myself was 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.


    Beyond Republican opposition, the president acknowledged today he faces skepticism from Democratic allies, leery of any cuts to entitlements.


    And I understand those fears.

    But I guarantee that if we don't make any changes at all, we won't be able to keep our commitment to a retiring generation that will live longer and will face higher health care costs than those who came before.


    With both parties' major plans now on the table, House Republicans plan to push through their budget by week's end. It faces little chance of passing the Democratic-controlled Senate.

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