Obama Gets Much Advice For Big Deficit Speech : It's All Politics President Obama is getting conflicting advice on deficit-reduction, with conservatives telling him to focus on cutting entitlements while liberals advise him to raise taxes on upper income taxpayers. Indications are Obama will do both.
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Obama Gets Much Advice For Big Deficit Speech

President Obama greets tourists at the Lincoln Memorial, Saturday, April 9, 2011. Manuel Balce Ceneta/AP hide caption

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Manuel Balce Ceneta/AP

President Obama greets tourists at the Lincoln Memorial, Saturday, April 9, 2011.

Manuel Balce Ceneta/AP

President Obama is set to give a major speech Wednesday afternoon on his plan to tackle the nation's large deficits and debt and, as you might expect, he's getting no shortage of advice.

Conservatives are telling him he'd better not propose tax increases, better to rein in entitlements while liberals are warning him to go easy on entitlements and raise taxes.

In short, the president is between a rock and a hard place. But he did ask for the job, after all.

All indications are that he will take his habitual approach of borrowing from both liberal and conservative ideas, in other words with some restraints on entitlements and tax increases on upper income Americans.

The White House sent out guidance to journalists Tuesday evening on the president's speech:

On Wednesday, the President will lay out his vision for reducing our deficit based on the values of shared prosperity and shared responsibility in a speech at The George Washington University.

The President will advocate a balanced approach to controlling out of control deficits and restoring fiscal responsibility while protecting the investments we need to grow our economy, create jobs, and win the future. The President's proposal will build off of the deficit reduction measures included in his 2012 budget and will borrow from the recommendations of the bipartisan Fiscal Commission he created.

The President will lay out four steps to achieve this balanced approach, including: keeping domestic spending low, finding additional savings in our defense budget, reducing excess health care spending while strengthening Medicare and Medicaid, and tax reform that reduces spending in our tax code.

The President will make clear that while we all share the goal of reducing our deficit and putting our nation back on a fiscally responsible path, his vision is one where we can live within our means without putting burdens on the middle class and seniors or impeding our ability to invest in our future.

Both Paul Krugman, the liberal Nobel Prize winning Princeton University economist, and Douglas Holtz-Eakin, a conservative who chaired George W. Bush's Council of Economic Advisors were on All Things Considered Tuesday offering variations of the above advice.

HOLTZ-EAKIN: His own commission has identified this as a national moment of truth. I believe there's every reason to be concerned about the welfare of the next generation if we continue down this path. He's the president of the U.S. And so I think he has an obligation to identify specific entitlement reforms that he would be willing to push in a bipartisan way through the Congress.

I know he's going to want to change the national conversation from spending to taxes but he can't do that too much. His own commission has said the problem is on the spending side. They tried to come up with plans that had the dominant correction on the spending side. He's been silent on spending and I think it's time for him to be specific about what he'd do.

KRUGMAN: He needs to explain to the nation that the problem of health care cost is actually not a problem of government spending on health care. It's a problem of health care costs. Talk about what he's done, talk about what more we can do about addressing the issue of health care costs which is every bit as serious for private insurance as it is for Medicare and Medicaid.

And he does have to say frankly look, there is really no way we can make this work without more revenue. Some people are going to have to pay higher taxes. He needs to refocus this whole discussion away from cutting government spending as the whole story to we need true health care reform and actually you have to pay for government, too.

Obama will clearly lean heavily on the Simpson-Bowles plan which bridged conservative and liberal positions by recommending both entitlement reform and revenue or tax increases.

But Alan Simpson, co-chair of the panel, is quoted in The Wall Street Journal saying the president will fail if he only offers generalities.

Alan Simpson, a former GOP senator from Wyoming who was co-chairman of the White House's deficit commission last year, said if Mr. Obama's speech lacks details, it could be widely panned. "If it's going to be 'people need to do this and do that' without being specific, I think it will be to his detriment," he said.

Meanwhile, Robert Reich, the University of California, Berkeley professor and former Clinton Administration Labor secretary, recommends the president explain to the American people that Medicare isn't the problem but actually could be an important part of the solution to slowing health care inflation.

The real problem is the soaring costs of health care that lie beneath Medicare. They're costs all of us are bearing in the form of soaring premiums, co-payments, and deductibles...

... So what's the answer? For starters, allow anyone at any age to join Medicare. Medicare's administrative costs are in the range of 3 percent. That's well below the 5 to 10 percent costs borne by large companies that self-insure. It's even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it's way, way lower than the administrative costs of individual insurance (40 percent). It's even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

It's a safe bet that the president probably is unlikely, to say the least, to propose expanding Medicare to everyone. But that's certainly as bold an idea as Rep. Paul Ryan (R-WI) idea of privatizing it.