Deficit Speech Will Be Lightning Rod
WASHINGTON -- President Barack Obama will describe his plans for long-term deficit reduction Wednesday, in a move likely to kick off a months-long debate with Republicans while alienating some members of his own Democratic Party.
In a midday speech in Washington, Mr. Obama will propose a plan that includes cuts to entitlement programs such as Medicare, limits on military spending and an overhaul of the tax system designed to bring in more revenue. To pre-empt criticism from lawmakers, Mr. Obama is hosting congressional leaders at the White House on Wednesday morning to preview his goals.
Mr. Obama is expected to praise the work of a deficit-reduction commission he created last year, which proposed a series of tax, spending and entitlement-program changes that would reduce the deficit by roughly $4 trillion over 10 years. He is also expected to pledge support for a bipartisan group of six senators working on legislation that would implement the panel's recommendations.
People familiar with the matter said he wouldn't fully endorse either of those approaches, but instead would lay out his own formula for deficit reduction. A key question is how detailed he will be in the speech. Mr. Obama didn't include proposals for long-term reductions in entitlement spending in his formal budget plan in February.
The White House described Mr. Obama's vision for reducing the deficit as one "based on the values of shared prosperity and shared responsibility" and said his speech would lay out four steps to achieve a "balanced" approach. Those are: "keeping discretionary spending low,'' cutting the trajectory of defense spending, overhauling the tax code and cutting health care costs "while strengthening Medicare and Medicaid.''
While Mr. Obama is expected to address Medicare changes, he is unlikely to wade far into Social Security, a program the White House argues doesn't have an immediate impact on the deficit. White House officials have said, however, that there should be a discussion about how to make Social Security solvent for the long term.
"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," a White House official said in advance of the speech.
The speech, which the White House has billed as a major address, will be Mr. Obama's first big step into the debate over taming long-term deficits.
In the meantime, House Republicans have taken the lead by releasing their own proposal for long-term deficit reduction, which they plan to bring to the House floor for a vote as early as this week.
Alan Simpson, a former GOP senator who was co-chairman of the White House's deficit commission last year, said that if Mr. Obama's speech lacked details, it could be widely panned.
With power in Washington split between the two parties, the odds aren't good that any detailed, long-term plan can be enacted this year. One alternative to passing a broad plan would be to enact a framework for deficit reduction with targets, details of which would be filled in after the 2012 election.
But many House Republicans say they won't vote to raise the government's debt ceiling in coming weeks without concrete steps to reduce the long-term deficit, which could force changes long before the election.
The deficit this year will be $1.5 trillion to $1.65 trillion, and the government has $14.2 trillion in accumulated debt. Rising health-care costs, retirement programs for baby boomers and the interest the nation must pay on existing borrowing all are expected to drive debt higher.
A key dividing line between the two approaches, and the two parties, is certain to be taxes. White House officials have said any effort to address deficits must be broad in scope, bipartisan and include higher revenues through changes to the tax code.
Many Republicans, meanwhile, say tax increases are a nonstarter, and the House GOP budget, drawn up by Budget Committee Chairman Paul Ryan (R., Wis.), lays out a deficit-reduction strategy without additional taxes.
"From my point of view, taxes are not on the table, because we don't have a revenue problem, we have a spending problem," said Senate Minority Leader Mitch McConnell (R., Ky.).
On the left, the mere anticipation that Mr. Obama will propose scaling back the entitlement programs that Democrats have long championed has sent some members of the party scrambling. Many liberals oppose making cuts to Medicare and say changes in Social Security shouldn't be part of any conversation about reducing the deficit, because they do not see that program as a major part of the nation's fiscal problem.
A coalition of 300 mostly liberal-leaning groups sent a letter to the White House on Tuesday urging Mr. Obama to wall off Social Security from any discussion of the deficit.
Rep. Chris Van Hollen (D., Md.), the ranking Democrat on the House Budget Committee, said the core of the president's speech isn't likely to revolve around firm numbers. "What we're really seeing here is an effort to take some greater control over the debate," he said.
White House press secretary Jay Carney refused to provide details on the speech Tuesday, but said Mr. Obama's approach included "the willingness to take on the sacred cows in your own party."
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