Fact Sheet: President's Plan for Economic Growth & Deficit Reduction
Monday, September 19, 2011
Living Within Our Means and
Investing in the Future:
The President’s Plan for Economic
Growth and Deficit Reduction
of our economy depends on what we do right now to create the conditions where
businesses can hire and middle-class families can feel a basic measure of
economic security. In the long run, our prosperity also depends on our ability
to pay down the massive debt the federal government has accumulated over the
past decade. Today, the President sent to the Joint Committee his plan to
jumpstart economic growth and job creation now – and to lay the foundation for
it continue for years to come.
Plan for Economic Growth and Deficit Reduction lives up to a simple idea: as a
Nation, we can live within our means while still making the investments we need
to prosper – from a jobs bill that is needed right now to long-term investments
in education, innovation, and infrastructure. It follows a balanced approach:
asking everyone to do their part, so no one has to bear all the burden. And it
says that everyone – including millionaires and billionaires – has to pay their
fair share. Overall, it pays for the President’s jobs bill and produces net
savings of more than $3 trillion over the next decade, on top of the roughly $1
trillion in spending cuts that the President already signed into law in the
Budget Control Act – for a total savings of more than $4 trillion over the next
decade. This would bring the country to a place, by 2017, where current
spending is no longer adding to our debt, debt is falling as a share of the
economy, and deficits are at a sustainable level.
to help businesses hire and grow
o Cutting the
payroll tax in half on the first $5 million in payroll, targeting the benefit
to the 98 percent of firms with payroll below this threshold.
payroll tax holiday for added workers or increased wages up to $50 million
100 percent expensing into 2012
o Reforms and regulatory reductions
to help entrepreneurs and small businesses access capital
workers back on the job while rebuilding and modernizing America
Heroes” hiring tax credit for veterans
up to 280,000 teacher layoffs, while keeping cops and firefighters on the job
o Immediate investments in
infrastructure, school buildings, and neighborhoods as well as a bipartisan
National Infrastructure Bank
back to work for Americans looking for jobs
o The most
innovative reform to the unemployment insurance program in 40 years and
extension of emergency unemployment insurance preventing 6 million Americans
looking for work from losing benefits
o A $4,000 tax credit to employers
for hiring the long-term unemployed
employers from discriminating against unemployed workers when hiring
o Expanding job
opportunities for low-income youth and adults
Tax relief for every American worker and family
payroll taxes in half for 160 million workers next year
o Allowing more
Americans to refinance their mortgages
Fully paid for as part of the President’s long-term deficit reduction plan
FOR OUR INVESTMENTS AND REDUCING THE DEFICIT
The plan produces approximately $4.4 trillion in deficit reduction net the cost
of the American Jobs Act.
trillion from the discretionary cuts enacted in the Budget Control Act.
billion in cuts and reforms to a wide range of mandatory programs;
o $1.1 trillion from the drawdown of troops in
Afghanistan and transition from a military to a civilian-led mission in Iraq
trillion from tax reform
o $430 billion in
additional interest savings
To spur economic growth and job creation, the
plan includes one-time investment and relief in the American Jobs Act. That
adds to the deficit in 2012 but is fully paid for over 10 years, and deficit
reduction phases in starting in 2013, as the economy grows stronger.
Deficit reduction is achieved in a balanced approach, with a spending cut to
revenue ratio for the entire plan (including discretionary cuts) of 2 to 1.
The Joint Committee plan significantly reduces deficits and puts the country on
a fiscally sustainable path by 2017.
o The deficit is projected to fall to 2.3 percent
of GDP in 2021. By comparison, if we did nothing, the deficit would be 5.5
percent of GDP in 2021.
o Reaches "primary
balance”-- where our current spending is no longer adding to our debt -- in
2017. At that point, current spending is no longer adding to our debt, debt is
falling as a share of the economy, and deficits are at a sustainable level.
The President’s plan would reduce the national debt as a share of economy.
or falling debt as a share of the economy is a key metric of fiscal
o If we did
nothing, the national debt would rise to 90.7 percent of GDP in 2021. By
contrast, under the President’s plan, the national debt would fall to 73.0
percent of GDP in 2021 -- or an improvement of almost 18 percentage points.
The plan includes $320 billion in health savings that build on the Affordable
Care Act to strengthen Medicare and Medicaid by reducing wasteful spending and
erroneous payments, and supporting reforms that boost the quality of care. It
accomplishes this in a way that does not shift significant risks onto the
individuals they serve; slash benefits; or undermine the fundamental compact
they represent to our Nation’s seniors, people with disabilities, and
The plan includes $248 billion in savings from Medicare.
o Within this total, 90 percent of the savings, or
$224 billion, comes from reducing overpayments in Medicare.
savings that affect beneficiaries do not begin until 2017.
o The plan does
not propose to change the eligibility age for Medicare benefits.
Other health and Medicaid savings amount to $72 billion.
Because of the structural nature of these reforms, health savings grow to over
$1 trillion in the second decade.
The President will veto any bill that takes one dime from the Medicare
benefits seniors rely on without asking the wealthiest Americans and biggest
corporations to pay their fair share.
The plan includes $250 billion in savings from other mandatory programs.
Included within these savings are:
billion in savings from agriculture subsidies, payments, and programs
o $42.5 billion in reforms to Federal employee
benefit programs, including programs for civilian employees and military
billion from the disposal of unused government assets.
billion from restructuring government operations and reducing government
o $77.6 billion
from improving Federal program management and reducing waste and abuse.
The President calls on the Committee to undertake comprehensive tax reform, and
lays out five principles for it to follow: 1) lower tax rates; 2) cut wasteful
loopholes and tax breaks; 3) reduce the deficit by $1.5 trillion; 4) boost job
creation and growth; and 5) comport with the "Buffett Rule” that people making more
than $1 million a year should not pay a smaller share of their income in taxes
than middle-class families pay.
o Tax reform
should draw on the specific proposals the President has put forward, together
with elimination of additional inefficient tax breaks. If the Joint Committee
is unable to undertake comprehensive tax reform, the President believes the
discrete measures he has proposed should be enacted on a standalone basis.
Their enactment as a standalone package still would significantly improve the
country’s fiscal standing, represent an important step toward more fundamentally
transforming our tax code, and serve as a strong foundation for economic growth
and job creation.
o To advance this
debate, the President is offering a detailed set of specific tax loophole
closers and measures to broaden the tax base that, together with the expiration
of the high-income tax cuts, would be more than sufficient to hit the $1.5
trillion target. These include:
2001 and 2003 tax cuts for upper income earners to expire ($866 billion)
Limiting deductions and exclusions for those
making more than $250,000 a year ($410 billion)
loopholes and eliminating special interest tax breaks (approximately $300