Reducing the Deficit . . .
The President’s deficit-reduction plan, presented in a speech on April 11, includes a combination of spending cuts and allowing the Bush tax cuts for the wealthy to naturally expire.
Keeping closely to the President’s words, we present here a brief look at Obama’s principles for a fiscal policy — a policy that is projected to reduce the deficit by $4 trillion over the next 12 years.
Step #1: Keep annual domestic spending low by building on savings that both parties have agreed to.
- That step alone, says Obama, will save us about $750 billion over 12 years.
- “But” he adds, “I will not sacrifice the core investments that we need to grow and create jobs.”
- We will, says Obama, continue to invest in medical research, clean energy technology, education, job training, new roads, airports and broadband access.
Step #2: Find additional savings in the defense budget.
- “I will never accept cuts that compromise our ability to defend our homeland or America’s interests around the world,” says the President,
- adding that in the last two years, Secretary Bob Gates has identified $400 billion in wasteful Military spending.
- Obama will continue working with Secretary Gates and the Joint Chiefs of Staff on a review of military spending and will make decisions about cuts after this investigation is complete.
Step #3: Further reduce health care spending in our budget.
- “Now, here,” says Obama, “the difference with the House Republican plan could not be clearer.
- Their plan essentially lowers the government’s health care bills by asking seniors and poor families to pay them instead.
- Our approach lowers the government’s health care bills by reducing the cost of health care itself.”
- Obama pointed out that the reforms passed in the health care law will reduce our deficit by $1 trillion, and
- “further savings can be achieved by reducing wasteful subsidies and erroneous payments.”
- For example, the government can cut spending on prescription drugs by using Medicare’s purchasing power to drive down costs and to lessen the time it takes to get less-costly generic medicines to the market.
Step #4: Reduce spending in the tax code.
- “In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans.
- But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society,”
- In fact, said Obama, “I refuse to renew them again.”
- Allowing the tax rate for the top 2% to rise from 35% to 39% would save $42 billion a year.
- The President added that his budget also calls for limiting itemized deductions for the wealthiest 2% of Americans which would further reduce the deficit by $320 billion over 10 years.
Just thought you should know.®
Sources: Transcript of “Remarks by the President on Fiscal Policy,” www.WhiteHouse.com, 4/13/11. William Walden, “Cost Of Tax Cuts For America’s Rich Exceeds Value Of Budget Cuts,” TheHuffingtonPost.com, 4/18/11.