President Obama will announce a deficit reduction plan Monday that will total $4.4 trillion in savings over the next decade, according to senior administration officials.
On a conference call Sunday, the officials said the $4.4 trillion is a net deficit reduction after the American Jobs Act takes effect. Some critics may complain about his numbers, including the president’s claim of $1.1 trillion in savings from what the government would have to spend if the wars in Iraq and Afghanistan were not winding down.
The deficit reduction package includes new taxes totaling $1.5 trillion, mostly on upper income earners, and he intends to argue that no long-term stability is possible unless the plans balance spending cuts with revenue increases.
The “Buffet Rule” he will propose would establish the principle that anyone earning more than $1 million a year should not pay taxes at a lower rate than middle class Americans. The rule is named for investor Warren Buffet who wrote in August that the wealthy are being “coddled.”
The president considers his call for tax changes to “start the debate” on long-term reform. He believes his plan would put the country on a path to a sustainable fiscal course with taxes that are fairer and the burden is shared.
According to senior administration officials, the president’s plan to be announced in a Monday morning Rose Garden ceremony includes these elements: $1.2 trillion in discretionary cuts that were already enacted in the Budget Control Act passed by Congress; $580 billion in cuts and reforms across all mandatory programs; $1.1 trillion in savings from troop draw downs in Iraq and Afghanistan; $1.5 in tax reform — $800 billion from allowing the top rate Bush tax cuts to expire; $700 billion in closing loopholes and limiting deductions many of which he has discussed publicly before; $430 billion would be additional interest savings.
For Medicare, the president will not propose any change in the retirement age but he will offer savings of $248 billion and extend the Medicare solvency for three years. Some 90 percent of the savings would come from reducing overpayments in Medicare and there will be beneficiary changes, to take effect until in 2017.
One senior administration declared the president will veto any bill that takes one dime from Medicare benefits. He will propose $72 billion in savings from Medicaid.