President unveils deficit reduction plan
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Today, the President unveiled a plan to reduce the deficit by $3 trillion over 10 years. The plan includes a mix of tax increases and spending cuts. The plan comes on the heels of the White House’s release of the “American Jobs Act” last week, a $447 billion plan to encourage job growth.
The deficit reduction blueprint released today consists of $1.5 trillion in tax increases – $800 billion from allowing the Bush-era tax cuts to expire for households making over $250,000 a year, $400 billion by limiting charitable contribution deductions for wealthy filers, and the rest through closing loopholes for oil and gas companies, private jet owners, and investment fund managers.
The plan also includes cuts to entitlement programs Medicare and Medicaid. The President will not seek an increase in the Medicare eligibility age, but will slice $248 billion from the program. The proposal outlines $72 billion in cuts from Medicaid. Politico reports another “about $180 billion [would be cut] from other mandatory programs, according to the White House.”
The total number includes $1 trillion in savings from winding down the wars in Iraq and Afghanistan as well as $430 billion from reduced borrowing costs. The rising costs of Social Security are not addressed in the White House’s plan.
In the President’s opening statement to Congress, he urges:
The American people work hard to meet their responsibilities. Now, as the Nation faces an economy that is not growing and creating jobs as it should, so must its leaders. While the continued recovery of our economy will be driven by the businesses and workers across our land, policymakers in Washington can take steps to help Americans right now and set the most favorable conditions we can for growth and job creation for years to come.
In a blog post on the WhiteHouse.gov, OMB director, Jack Lew, echoes President Obama’s messages:
[I]f we do nothing, our economy will not get the jolt it needs now and it will be weighed down by our debt or years to come. If we don’t take these steps now, it will only get harder.
I’ve been working on these issues for three decades, and I can tell you that making these changes in this plan will require some tough choices. Everyone will have a cut or a new policy that they do not like – or wish that they could avoid. But remember: the challenge we face is one that we all face – together – as Americans. We are in this together, and the only way that we can have a balanced approach is that we all do our part.
We wholly agree with the sentiment of the President and Mr. Lew’s statements. Lawmakers must take a cue from Americans and begin to budget and spend responsibly; businesses and workers must drive an economic recovery, we must make difficult decisions now or they will only be more difficult the longer we wait. But is this plan the right way to tackle our economic problems?
Government overspending has given us trillions in annual deficits, all adding up to a nearly $15 trillion national debt. Shouldn’t we fix the problem by reversing what got us here in the first place? While the tax code is certainly in need of reform, our economy will not be given a chance to recover if Washington cannot learn to live within its means. It won’t be easy, but it should be obvious.