- The Washington Times - Wednesday, April 13, 2011

Seeking to reassert leadership and reassure troubled financial markets that the deficit will be brought under control, President Obama on Wednesday called for tax increases and spending cuts he said would reduce deficits by $4 trillion over 12 years — and vehemently denounced Republicans’ own deficit plans as an assault on the elderly and poor.

In a speech that sounded as much like a 2012 election kickoff speech as a call to action on Capitol Hill, Mr. Obama said he wants to see a final deficit reduction deal by June, but also said the House Republican proposal on the table now is not “serious.” He drew repeated lines that he said he would not cross with Republicans on Medicare, Medicaid, and extending all of the Bush-era tax cuts.

“I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs. I will not tell families with children who have disabilities that they have to fend for themselves,” the president said in a speech laying out a framework for deficit reduction. “We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations.”

Republicans, in reply, drew lines of their own, ruling out the president’s proposed tax increases. Some party members also said it was unlikely the Pentagon could absorb the $400 billion in defense cuts Mr. Obama said are possible by 2023.

“Any plan that starts with job-destroying tax hikes is a non-starter,” said House Speaker John A. Boehner, Ohio Republican. “We need to grow our economy — not our government.”

With so much ruled out by one side or the other, it leaves a narrow field for them to maneuver, though Republicans and Democrats alike said Mr. Obama’s speech at George Washington University marks a welcome escalation in the debate over what Washington spends and how much it taxes.

Mr. Obama even set a deadline on that discussion, saying Vice President Joseph R. Biden will begin leading meetings with congressional leaders early next month to have a bipartisan deficit-reduction deal completed by the end of June.

Specifically, Mr. Obama said he will try to squeeze an extra $360 billion by 2023 from automatic spending programs, which are based on formulas and not renewed by Congress each year; seek to grab an additional $480 billion from Medicare; and cut defense spending by $400 billion versus projected levels and another $200 billion in regular domestic spending.

The president also called for undoing the Bush tax cuts for upper-income taxpayers, and for canceling other tax cuts many of them receive such as the mortgage interest deduction — items that instead of labeling “tax increases” he called “spending reductions in the tax code.”

In many of those cases, he said, he is just setting parameters and expects others to suggest or actually make the cuts. In Medicare, for example, he said the new payments board set up in last year’s health care law will clamp down tighter on cost increases, while he will have his defense secretary figure out where military funding can be cut.

Mr. Obama claimed his new plan would reduce projected deficits by $4 trillion by 2023, slightly more than the amount the debt accumulated during his term of office.

The House, meanwhile, will vote later this week on a Republican-written budget that Rep. Paul Ryan, Wisconsin Republican and Budget Committee chairman, said would reduce projected deficits by $6 trillion without raising taxes.

Mr. Ryan’s plan would convert Medicaid, the federal-state health program for the poor, into a block grant to states. It would also change Medicare, the health program for seniors, so that instead of paying directly for care, it would pay seniors premiums and then they would shop for the best health care plan for themselves.

With Mr. Ryan sitting in the front row at Wednesday’s speech, Mr. Obama gave a stout defense of the taxpayer-funded safety net that has built up over the past century, and repeatedly attacked the Republican plan as an assault on that.

“This vision is less about reducing the deficit than it is about changing the basic social compact in America,” Mr. 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. And I don’t think there’s anything courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill.”

Mr. Ryan was taken aback by the attack.

“When the president reached out to ask us to attend his speech, we were expecting an olive branch. Instead, his speech was excessively partisan, dramatically inaccurate, and hopelessly inadequate to address our fiscal crisis,” the Wisconsin Republican said. “What we heard today was not fiscal leadership from our commander in chief; we heard a political broadside from our campaigner in chief.”

Mr. Obama made the remarks two months after the president sent a 2012 budget outline to Capitol Hill that was widely panned by both parties for failing to tackle the big deficit-driving programs such as entitlements and for using accounting techniques that the nonpartisan Congressional Budget Office rejected.

The speech also comes several months after a bipartisan panel that Mr. Obama created came up with a deficit-slashing proposal that failed to garner enough votes for congressional consideration. At the time, Mr. Obama kept his distance from that plan, which would have trimmed $4 trillion from the federal tab over the next decade.

The bipartisan co-chairmen of the 18-member panel, former White House chief of staff Erskine Bowles and former Sen. Alan Simpson, later said Mr. Obama’s February budget proposal went “nowhere close” to addressing the nation’s long-term fiscal challenges.

The two men were nevertheless on hand Wednesday for Mr. Obama’s speech.

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