By Sam Youngman and Erik Wasson - 04/14/11 12:24 AM EDT
In a sharply worded address designed to boost the White House in its fight with Republicans over spending, President Obama on Wednesday called for the nation to reduce budget deficits by $4 trillion over the next 12 years.
Obama focused his criticism on the House Republican budget, zeroing in on reforms it would make to Medicare and Medicaid that the president said would fundamentally change the relationship between the government and citizens.
“This debate over budgets and deficits is about more than just numbers on a page, more than just cutting and spending,” Obama said in his address at George Washington University. “It’s about the kind of future we want. It’s about the kind of country we believe in.”
The GOP “vision is less about reducing the deficit than it is about changing the basic social compact in America,” the president said.
Obama blamed the Bush administration and GOP-led Congresses in the last decade for enacting tax cuts for the wealthy and an expensive prescription drug benefit without paying for either, all at a time the nation was fighting costly wars overseas. This had caused a devastating deterioration in the nation’s checkbook, he said.
He said the cuts a new Republican-led House driven by Tea Party conservatives is now proposing “paint a vision of our future that’s deeply pessimistic.”
Republican leaders reacted angrily to Obama’s words, which some likened to a campaign speech.
House Budget Committee Chairman Paul Ryan (R-Wis.), who introduced the budget resolution that was a target of Obama’s criticism, said the president offered an excessively partisan address coupled with an inadequate plan for reducing the nation’s deficit.
“What we heard today was not fiscal leadership from our commander in chief; we heard a political broadside from our campaigner in chief,” he said.
Obama’s speech and the reaction to it from Republicans creates an inauspicious start for a new group of lawmakers who are to discuss a long-term deal to reduce the deficit.
Obama asked Speaker John Boehner (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Nancy Pelosi (D-Calif.) to tap four members from their caucuses to participate in negotiations to be led by Vice President Biden.
The negotiations will begin in early May, the White House said, with the goal of wrapping up by the end of June. That would dovetail with a new deadline for agreeing to raise the nation’s $14.3 trillion debt ceiling. The Treasury Department has set a July 8 deadline for the ceiling to be raised.
In his address, Obama called for cuts to discretionary spending, reforms to Medicare and Medicaid and increased taxes on the rich to reduce the budget deficit.
The president broke a campaign promise in December when he agreed to extend all of the Bush-era tax rates, including those on the wealthy, as part of a deal with the GOP.
In his speech, he said he would refuse to renew the Bush tax rates a second time.
“We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society, and I refuse to renew them again,” Obama said.
Republicans dismissed the calls for higher taxes and new talks.
Ryan accused Obama of ignoring his own fiscal commission’s recommendations last year, saying “now he wants to delegate leadership to yet another commission to solve a problem he refuses to confront.”
The key part of the president’s plan is a built-in cap that is far softer than the hard caps on spending called for by Obama’s own fiscal commission.
Instead, Obama proposed a “debt fail-safe” trigger that would initiate “across-the-board spending reductions” if by 2014 the projected ratio of debt-to-gross domestic product (GDP) “is not stabilized and declining toward the end of the decade,” according to a fact sheet released by the White House in advance of the president’s speech.
The White House said the trigger should ensure that deficits average no more than 2.8 percent of GDP in the second half of this decade. The trigger would not be applied to Social Security payments, Medicare benefits or low-income programs.
The $4 trillion in deficit reduction would come in part from reductions in discretionary and mandatory spending and savings from Medicare and Medicaid. Obama cautioned that the efforts should be phased in so as not to threaten the economic recovery.
Obama went further in proposing reforms to bring down the deficit than he did in his original 2012 budget. The new plan would reduce deficits by $3 trillion over 10 years, compared to $1.1 trillion in deficit reduction in Obama’s 2012 budget.
Ryan’s budget, which is set for a House vote this week, would cut $5.8 trillion in spending over the next decade and reduce deficits by $4.4 trillion compared to Obama’s 2012 budget proposal.
Obama was particularly critical of Ryan’s proposals for entitlements, saying the Republican plan would “end Medicare as we know it.”
“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,” Obama said.
Obama embraced some of the recommendations of his debt commission, including its call for a balanced approach to deficit reduction that would take $3 in spending cuts and interest savings for every $1 from tax reform.
Like Ryan, Obama largely gives a pass to Social Security.
“The president does not believe that Social Security is in crisis nor is a driver of our near-term deficit problems,” the White House said.
The president is not proposing major cuts to defense spending, but does call for the savings of $400 billion in current and future defense spending. Obama’s framework calls for holding the growth in base security spending below inflation, while “ensuring our capacity to meet our national-security responsibilities.”
The White House said specific defense cuts would be determined by the president and Defense Secretary Robert Gates.
This post was originally published at 12:51 p.m and updated at 8:24 p.m.
It initially contained a comparison between Obama's deficit-reduction plan and the House GOP that was based on incomplete information.