Reducing Our Long-Term Deficit Through Shared Responsibility and Shared Prosperity
Monday, April 18, 2011
· The President Obama proposed a balanced approach to achieve $4 trillion in deficit reduction, based on the values of shared responsibility and shared prosperity.
o This approach borrows from the recommendations of the Bipartisan Fiscal Commission and builds on the $1 trillion in deficit reduction in the President's 2012 budget.
o At the same time, it will protect the middle-class, defend our commitments to seniors, and make the smart investments we need to create good jobs and grow our economy.
· The President's vision is in stark contrast to the House plan, which places the burden of debt reduction on those that can least afford it. It ends Medicare and raises health care costs for seniors in order to pay for a trillion dollars in tax cuts for millionaires and billionaires.
· The first step in the President's balanced approach is to keep annual domestic spending low.
o The bipartisan agreement we reached last week represented the largest one-year cut to this kind of spending in history, while still making investments to grow our economy and win the future. The President's approach would build on these savings for the years that follow, a step that will save us about $770 billion over twelve years.
· The second step in our approach is to find additional savings in our defense budget.
o Secretary Gates has courageously taken on this wasteful spending, and we've achieved some real savings, but we will also find an additional $400 billion in defense savings by 2023 while ensuring our capacity to meet our national security.
· The third step is to reduce health care spending, not by asking seniors and poor families to pay more but by reducing the cost of health care itself.
o The President's approach builds on the Affordable Care Act by including new reforms aimed at further reducing health care spending while strengthening Medicare and Medicaid.
o These reforms will enable us to keep our commitment to our citizens and save us about $480 billion by 2023, and an additional one trillion dollars in the decade after that.
· The fourth step in our approach is to reduce spending in the tax code.
o The nation cannot afford another extension of the tax cuts for the wealthiest 2% of Americans. That would put us another trillion dollars in debt at a time when we're trying to climb out.
o President Obama's 2012 budget already calls for limiting itemized deductions for the wealthiest 2% of Americans – a reform that would reduce the deficit by $320 billion over ten years.
o President Obama is calling on Congress to reform our individual tax code so that it is fair and simple – so that the amount of taxes you pay isn't determined by what kind of accountant you can afford.
· Finally, the President is calling for a "debt failsafe” trigger to ensure a decline in the debt as a share of the economy. The President is confident that, with continued economic growth and a bipartisan agreement on deficit reduction, we will reduce the debt as a share of the economy. However, as a strong incentive for Congress to act on deficit reduction and to ensure we hit this goal, the President is proposing a trigger that would require that, by the second half of the decade, our nation's debt is on a declining path as a share of our economy. If that target isn't met by 2014, there would be automatic spending cuts (both in direct spending and spending through the tax code).
· The President does not believe that Social Security is in crisis or a driver of our near-term deficit programs. But, he believes that both parties should work together now to strengthen Social Security for future generations.
· The time has come for action, and the President has asked Majority Leader Reid, Speaker Boehner, Minority Leader Pelosi and Minority Leader McConnell to each designate four Members from their caucuses to participate in bipartisan, bicameral negotiations led by the Vice President, beginning in early May. The goal of these negotiations is to agree on a legislative framework for comprehensive deficit reduction.
· This is our vision for America – a vision where we live within our means while still investing in our future; where everyone makes sacrifices but no one bears all the burden; where we provide a basic measure of security for our citizens and rising opportunity for our children.