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White House / WHITE HOUSE

Obama Unveils Deficit Reduction Framework

Administration claims $4 trillion through spending cuts, ending Bush tax rates.

President Obama speaks on fiscal policy at George Washington University.(Mark Wilson/Getty Images)

photo of Matthew Cooper
April 13, 2011

As Washington feverishly debates ways to reduce the nation’s mounting debt, President Obama weighed in on Wednesday with his most detailed plan yet, one which vows to cut $4 trillion in federal spending over 12 years.

The Obama framework, as administration officials call it, proposes a number of avenues for reducing federal spending, including savings in Medicare, cuts in defense spending, and a repeal of the Bush era tax cuts. The White House calls this a "balanced" approach, juxtaposing it with the plan put forward by Rep. Paul Ryan, R-Wis., that will be taken up by the House later this week.

Like Ryan's plan, the president's framework recognizes that trimming discretionary spending--about 12 percent of the federal budget--will not address the nation's long-term debt. 


The president’s framework also calls for Congress to enact a "debt failsafe trigger" that will cut federal spending if Congress can't. Obama has also asked each congressional party leader to designate two members who will engage in bicameral, bipartisan negotiations led by Vice President Joe Biden.

Also from National Journal …

Text of Obama's Speech

Obama also said he would work with Defense Secretary Robert Gates and Joint Chiefs Chairman Mike Mullen on coming up with defense cuts. Gates has already called for some $400 billion in cuts from current spending projections. 

The plan offers opportunities and risks for Obama. On one hand, it allows him to reframe the debate on terms that leave him as the champion of the popular Medicare program. On the other, he's offering enough cuts that he's likely to anger his party's liberal base going into an election year when he'll need their energy and enthusiasm. Indeed, Obama on Wednesday spoke directly to liberals, saying, "if we believe that government can make a difference in people's lives, we have the obligation to prove that it works--by making government smarter, leaner, and more effective."

Even before the president spoke at George Washington University, Republicans rejected the call for rate hikes for the wealthiest taxpayers. “We don’t believe a lack of revenue is part of the problem,” Senate Minority Leader Mitch McConnell, R-Ky., said after leaving a White House meeting. The discussion of long-term debt comes just days after the president and Republicans agreed on cuts to the 2011 budget and as the so-called "Gang of Six" Republican and Democratic senators try to forge their own ideas for debt reduction--a Herculean task given the chasm between the parties over tax hikes and Medicare cuts.

For a Democratic president noted for praising Ronald Reagan, Obama lamented the '80s, when Reagan in office, as a period of increased deficit spending. He praised Presidents George H.W. Bush and Bill Clinton and the congresses of the '90s for taking positive steps to reduce the country's debt. He went on to describe the first decade of the 21st century, saying "we lost our way." Republicans for their part have focused their ire on the increase in debt since Obama took office in 2009.

Notably in the speech, the president rejected the idea that Social Security is a big part of the nation’s fiscal problems. However he did leave open the possibility of tinkering with the program to accommodate the challenges posed by the retirement of the Baby Boom generation.

Obama also called for comprehensive tax reform by reducing loopholes and lowering rates across the board. His bipartisan fiscal commission also called for tax reform in its report released late last year. 

The commission's chairmen, former White House Chief of Staff Erskine Bowles and former Sen. Alan Simpson, R-Wyo., were both in attendance at the speech, which seemed fitting since the president seemed to use their no-sacred-cows approach as a lodestar for his own address. 

Whether the Obama plan or any other can form the basis of a grand compromise on deficit reduction that can command a bipartisan majority in Congress remains to be seen. It's probably telling that the fiscal commission was able to command a majority, but not easily, and five of the six House members voted to reject it--perhaps presaging the arduous task facing the president now that he's stepped into the breach. 

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