Obama Proposes Tax Hikes, Cuts To Trim Deficit

President Obama laid out his plan for long term deficit reduction Wednesday. He largely embraced the goals of his deficit commission — calling for $4 trillion in cuts and tax hikes over 12 years.

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When President Obama laid out his long-term plan for reducing the national debt, he called for $4 trillion in spending cuts and tax hikes over 12 years. That number, four trillion, is similar to the goal laid out last week by Republican Congressman Paul Ryan, the GOP's point-man on the budget. But the president and the congressman take very different approaches to reaching that goal.

We begin our coverage with NPR's Mara Liasson.

MARA LIASSON: President Obama said doing nothing about the deficit was not an option, but he said we have to fix the problem with a scalpel, not a machete. For every $1 in tax hikes, the president's plan would cut $2 in spending. The cuts would come from domestic programs, the military, Medicare and Medicaid. He would allow the Bush-era tax cuts for the rich to expire, and revamp the tax code to lower rates and eliminate loopholes.

President BARACK OBAMA: This is my vision for America, a vision where we live within our means while still investing in our future, where everyone makes sacrifices, but no one bears all the burden, where we provide a basic measure of security for our citizens and we provide rising opportunity for our children.

LIASSON: The president had waited to give this speech until Republican House Budget Chair Paul Ryan released his plan. That happened last week. And yesterday, the president attacked Ryan's plan with gusto, taking aim at its cuts in programs for the poor and its plan to change Medicare by giving seniors so-called premium support to buy insurance on the private market.

Pres. OBAMA: It says instead of guaranteed health care, you will get a voucher. And if that voucher isn't worth enough to buy the insurance that's available in the open marketplace, well, tough luck. You're on your own.

LIASSON: I will not allow Medicare to become a voucher program, he said. That heartened Democrats who'd worried that Mr. Obama would move too far to the right. And they were happy that he attacked Republicans for giving a trillion dollars in tax cuts to the rich. He had extended those same upper-income cuts in a deal with the GOP last year, but yesterday he said he would never do that again.

Pres. OBAMA: They want to gave people like me a $200,000 tax cut that's paid for by asking 33 seniors each to pay $6,000 more in health costs. That's not right. And it's not going to happen, as long as I'm president.

LIASSON: As for his cuts, Mr. Obama said they would be backed up by a fail-safe trigger that would force automatic cuts in tax hikes if Congress didn't meet its deficit reduction targets.

Pres. OBAMA: That should be an incentive for us to act boldly now, instead of kicking our problems further down the road.

LIASSON: The president had a warning for Democrats who would rather bash Republicans than compromise with them on Medicare and Medicaid.

Pres. OBAMA: To those in my own party, I say that if we truly believe in a progressive vision of our society, we have an obligation to prove that we can afford our commitments.

LIASSON: At a Bloomberg breakfast yesterday, Illinois Senator Dick Durbin, a member of the president's deficit commission, said the budget crisis should be a wake up call to the left.

Senator DICK DURBIN (Democrat, Illinois): The old liberal arguments are not sustainable. When you're borrowing 40 cents out of every dollar, you spend for food stamps and education - and missiles, for that matter.

LIASSON: The president's speech infuriated Republicans. To House majority leader Eric Cantor, the speech was too partisan and the policy was all wrong.

Representative ERIC CANTOR (Republic, Virginia; Majority Leader): The president goes and delivers a speech in which the only concrete proposal the he proposed was raising taxes. And that solution falls far short of dealing with the kind of crisis that we are facing, as far as the debts concerned in this country.

LIASSON: The gulf between the two parties on taxes in particular seems insurmountable. But Jim Kessler, who runs a centrist Democratic think-tank, says the formula used by the president and his deficit commission - $2 in cuts for every dollar in tax hikes - is a good place to start.

Mr. JIM KESSLER (Vice President/Co-Founder, Third Way): I think that is the new center right now in this debate. And, you know, if I were a Republican, I'd say like, look, we're having a discussion about the deficit and about long-term debt, and that's what we wanted to do all along. So I think there's opportunities there for them there to come on board.

LIASSON: President Obama has asked the bipartisan leadership of Congress to appoint a 16-member negotiating team that would work with Vice President Biden to come up with a plan to reduce the deficit. He wants them to start in May and finish by the end of June. That would be just before the drop-dead date for raising the debt ceiling to avoid default.

Republicans say they won't vote for a debt ceiling increase unless there is a plan to reduce the deficit. And despite their anger at the president's speech, they haven't yet rejected his offer to negotiate.

Mara Liasson, NPR News, Washington.

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