For Republicans, there are cuts to Social Security and Medicare designed to enhance the solvency of both entitlement programs, and for Democrats, the plan includes a series of domestic spending measures meant to boost hiring, as well as tax code tweaks that would extract more revenue from top earners.
(Click here to read the White House’s summary of the plan)
Obama said in a ceremonial speech this morning that his top priority is to create jobs while also working to slash the nation’s deficit. He said that the two objectives don’t have to be mutually exclusive.
“We can do both,” he said. “We can grow our economy and shrink our deficits.”
The president’s statement was a knock against the GOP budget crafted by House Budget Committee Chairman Paul Ryan (R-Wis.), whose plan eliminates the deficit in 10 years by cutting federal spending by $5 trillion, dramatically transforming both Medicare and Medicaid and keeping current tax rates steady.
Obama touted the spending initiatives within his proposal intended to spur activity in the manufacturing and infrastructure sectors, along with new money for brain research and universal pre-school, which he’d fund through higher taxes on tobacco products. His plan would also raise the federal minimum wage to $9 dollars per hour, an item Obama touched upon in his State of the Union address back in February.
The president said that each of those measures are fully paid for.
As is the case for virtually all of the plans out there, the devil’s in the details for this one, as well.
Though the Social Security reforms would inject roughly $130 billion into the program’s trust fund, liberal Democrats are highly opposed to them. They say that under a “chained-CPI” formula that would tie benefits to a slower rate of inflation, most seniors would see smaller monthly checks. In addition, those same advocates are wary of Obama’s plan to cut Medicare by about $340 billion, done equally by cutting payments to doctors and asking wealthier recipients to pay more for their health benefits.
Meanwhile, Republican lawmakers are skeptical of Obama’s entitlement offer, arguing that he’s only making it to win GOP support for increasing taxes. Obama said today that closing loopholes and capping deductions for top earners must be part of the solution to reducing the country’s deficit.
“If you’re serious about deficit reduction,” he said,” then there’s no excuse to keep these loopholes open.”
But his budget also features the so-called “Buffett Rule,” which would impose a minimum tax rate of 30 percent on all income above $1 million per year. That proposal, which would generate billions in new revenue, is dead on arrival in the Republican House.
Republicans are also already questioning the president’s claim that his plan includes $1.8 trillion in deficit reduction, in addition to replacing sequestration, the across-the-board spending cuts that took effect last month. If allowed to stay intact, those cuts would total $1 trillion over the next decade, but Obama said his plan would replace them in a smarter fashion.
But the plan only contains an additional $600 billion in deficit reduction, bringing the grand total to 1.8 trillion. Obama said that when added to the $2.5 trillion he’s already reduced the deficit by, his plan would exceed the $4 trillion goal that “independent economists believe we need to stabilize our finances.” But Republicans dispute the veracity of that figure, claiming that it counts future money not spent in Iraq and Afghanistan as deficit reduction. GOP budget leaders argue that the plan really only reduces the deficit by about $100 billion.
White House officials, meanwhile, say that the roughly $675 billion in future war savings are not counted as part of the $1.8 trillion in deficit reduction featured within the plan. Rather, they say that about $160 billion of those unspent dollars will be used to help offset the cost of Obama’s proposed spending initiatives, with the rest going toward deficit reduction.
Obama will have a chance to sell his plan to Republicans when he hosts 11 GOP senators for dinner at the White House this evening. The get-together will mark the second time this year that Obama has invited Senate Republicans to dine with him.