President Obama Proposes $4 Trillion in Deficit Cuts

The President will seek to reduce the deficit by keeping domestic spending low, finding savings in the defense budget, reducing excess health care costs and reforming the tax code.

President Barack Obama on Aril 13 unveiled a $4 trillion dollar deficit reduction effort, and slammed Republican plans for sweeping spending cuts as an attempt to fracture America's social compact.

"The debate about budgets and deficits is about more than just numbers on a page, more than just cutting and spending," Obama said in a major speech attempting to define a major issue in his 2012 reelection battle.

"It's about the kind of future we want, it's about the kind of country we believe in."

Obama unveiled a plan to achieve $4 trillion in deficit reduction over 12 years or less, saying he was borrowing recommendations from a bipartisan fiscal commission which reported last year. He said he would seek to reduce the deficit by keeping domestic spending low, finding savings in the defense budget, reducing excess health care costs and reforming the tax code.

Obama, portraying himself as a voice of reason and a conciliator amid Washington's fevered political debate, called on Democrats and Republicans to come together to secure a prosperous future for their country.

But he savaged a rival budget and deficit reduction plan put forward by Republican congressman Paul Ryan, which aims to cut $4.4 trillion from the deficit over a decade.

Obama argued that Ryan's plan would cut spending by sweeping expenditure cuts on health care programs for the poor and the elderly while rewarding the richest Americans with tax cuts.

"The fact is, their vision is less about reducing the deficit than it is about changing the basic social compact in America," Obama said.

"There's nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires.

"There's nothing courageous about asking for a sacrifice from those who can least afford it and don't have any clout on Capitol Hill."

Obama met key congressional leaders ahead of the showpiece speech and Republicans immediately dug in over taxes.

But Republicans are challenging the president with new boldness, after what many commentators scored as a victory in securing $39 billion in new spending cuts in a last-gasp deal averting a government shutdown last week.

Before heading to the White House for the meeting with Obama, Eric Cantor, the number two Republican in the House of Representatives, slammed the president's approach. "This is vintage Obama. He's been standing on the sidelines expecting the rest of us to make the tough decisions and to lead this country," Cantor said, predicting Obama's plan would include tax hikes.

After the meeting, the president's top Republican adversary, House speaker John Boehner, rolled out his party's bottom line on taxes. "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," he said.

Republicans frequently use painful U.S. debt figures -- a projected annual deficit of $1.6 trillion this year and a cumulative public debt of $14.27 trillion as a political weapon. But Democrats hit back that the last Democratic president Bill Clinton bequeathed budget surpluses to George W. Bush, who they say ran up debt with tax cuts for the rich and wars that were not paid for.

The president's political goals seemed two-fold: to seek leverage in a short-term row over extending the US debt ceiling, and to define the coming campaign debate over spending.

The White House already is warning of financial "Armageddon" should Congress fail to raise the U.S. borrowing limit from $14.29 trillion -- a threshold it is set to exceed by May 16 -- or see the United States default on interest payments of its debt.

Republican leaders, aware of the likely severe crisis of confidence and possible recessionary results of a failure to act say the ceiling will be raised, but are seeking new budget cuts in return.

The White House says the issues of the debt ceiling and constraining the runaway deficit are separate, and that Republicans should not "play chicken" with the economy.

But Obama's decision to give a speech on deficit cutting is seen as an indirect acknowledgement of Republican demands.

Over the long-term, Obama's speech will help define the dominant economy and jobs debate heading into his 2012 reelection battle, amid a palpable feeling among many Americans that the country needs to tighten its belt.

Copyright Agence France-Presse, 2011

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