Obama To Reveal Deficit-Cutting Plan

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The federal government will hit the limit on its credit card next month, unless Congress acts to raise the debt ceiling. The debt ceiling has many lawmakers thinking about how to rein in deficits for years to come. President Obama will offer his prescription Wednesday.

RENEE MONTAGNE, host:

It's MORNING EDITION from NPR News. I'm Renee Montagne.

STEVE INSKEEP, host:

And I'm Steve Inskeep.

Here's one of the lessons of the budget battle that was resolved on Friday: A deadline gets people's attention. The possibility of shutting down the government certainly did. Now a bigger deadline is approaching. The federal government hits the limit on its credit card unless Congress acts to raise the debt ceiling.

Republicans are reluctant to do that without a plan to reduce the deficit. And it's in this context that President Obama offers a fiscal plan of his own this week.

We begin our coverage with NPR's Scott Horsley.

SCOTT HORSLEY: Even during the worst of the recession, when the federal government was spending money as fast as it could to keep the economy afloat, White House aides said there would come a time to change course. Ready or not, that time has apparently come.

White House spokesman Jay Carney says the president will outline his ideas for a leaner, less debt-ridden government tomorrow with a midday speech at George Washington University.

Mr. JAY CARNEY (White House Press Secretary): The speech will, once again, demonstrate the president's seriousness about deficit reduction. And he hopes that it will signal to members of Congress in both parties that he wants to work with them in a bipartisan way to address these issues.

HORSLEY: News of the president's speech came as a surprise to a bipartisan group of senators who've been working together on a budget compromise. Three Democrats and three Republicans who make up the so-called Gang of Six have been trying to turn the recommendations of the president's fiscal commission into law.

Georgia Republican Saxby Chambliss told a business luncheon in Atlanta yesterday the gang had was close to an agreement before they learned of the president's plan to speak.

Senator SAXBY CHAMBLISS (Republican, Georgia): The president threw us a little bit of a curve ball yesterday. We don't know what the White House is going to say.

HORSLEY: And so far the White House is not dropping many hints.

Mr. Obama has said in the past he does not agree with all the recommendations of his fiscal commission. Those include deep cuts in spending, changes to entitlement programs, and an increase in tax revenue.

Both Democrats and Republicans can find parts of the plan they object to. But Chambliss says it only works as a package.

Sen. CHAMBLISS: You can't do it with a reduction in spending alone. You can't do it with just reforming entitlements. You can't do it by increasing revenues. It's going to take all of those issues being on the table.

HORSLEY: The White House has praised the efforts of the Gang of Six. But Republican support for the Gang could evaporate if the senators' work comes to be seen as too closely aligned with the president.

Meanwhile, the Republican-controlled House is expected to vote this week on its own future budget proposal, spearheaded by Congressman Paul Ryan of Wisconsin. Ryan told NBC's Meet the Press" over the weekend his plan would overhaul the tax code, cutting the top personal and corporate income tax rates to 25 percent.

Representative PAUL RYAN (Republican, Wisconsin): Get rid of all those special interest loopholes so you can lower tax rates. It's the higher income earners who use those special interest loopholes. Get rid of the loopholes, lower the rates, make our economy more competitive. Flatter, fairer, simpler tax system.

HORSLEY: The Gang of Six and the president have also endorsed the idea of lowering tax rates and eliminating loopholes. But they'd use that process to raise more tax revenue, while Ryan insists tax revenues are high enough. Ryan also wants to privatize Medicare for future retirees and make deep cuts in spending. White House spokesman Carney complains Ryan's budget would shower tax breaks on the wealthy, while cutting services for seniors and the poor.

Mr. CARNEY: You can't simply slash entitlements, lower taxes, and call that a fair deal.

HORSLEY: As the president prepares to spell out his own deficit-cutting deal, Carney says Mr. Obama believes it's possible to strike a compromise this year and pass meaningful deficit legislation before the 2012 election.

Virginia Senator Mark Warner, who joined Chambliss in Atlanta yesterday, says politics imposes its own deadlines.

Senator MARK WARNER (Democrat, Virginia): I think our window is closing. I think we're literally talking within 30 days, or even sooner. Because you know, if not, people are going to default back. It will be the Democrat plan, the Republican plan.

Sen. CHAMBLISS: If we get into that, it's over.

HORSLEY: The White House insists tomorrow's speech was long planned, and not driven by the current budget showdown or the looming vote on the debt ceiling. Nevertheless, there's no denying this collision of crises has raised the pressure and the stakes.

Scott Horsley, NPR News, the White House.

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