Obama Debt Speech: Tax Increases, Medicare Changes Included in Plan

WASHINGTON -- In an effort to recast the debate over the nation's fiscal future, President Barack Obama announced on Wednesday a plan to reduce the deficit by $4 trillion over 12 years. The plan was put together largely from the outline produced by his own deficit commission co-chairs.

The proposal, which comes as House Republicans get set to vote on a budget of their own and a bipartisan group of six Senators chart their own deficit-reduction framework, includes a mixture of tax hikes, drastic spending cuts, reductions in the Pentagon's budget and smaller entitlement reforms. It would seek to achieve a final balance of three dollars in spending reductions for every dollar generated in additional tax revenue.

"Now that our economic recovery is gaining strength, Democrats and Republicans must come together and restore the fiscal responsibility that served us so well in the 1990s," the president said in a speech at George Washington University. "We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt. And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs and win the future."

In a nod to the likelihood that a compromise won't be reached, President Obama also included a "debt fail-safe" trigger, mandating that Congress pass across-the-board spending reductions if the nation's debt is not on a declining path as a share of the economy by the second half of the decade.

 

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