President Obama this week will lay out a new approach to reducing the nation’s soaring debt, proposing reductions in spending on entitlements such as Medicare and Medicaid and renewing his call for tax increases on the rich.
In an effort to go on the offensive in the battle over government spending, Obama will look for cuts in “all corners of government,” senior adviser David Plouffe said on several Sunday talk shows.
Although Obama’s health-care law is projected to curtail Medicare spending over time, “we have to do more,” Plouffe said Sunday, marking the first time the administration has made an explicit commitment to changes in entitlement programs for the purpose of deficit reduction.
Contrasting the president’s approach with what Republican leaders have put forward, Plouffe said Obama will use a “scalpel” and not a “machete” as he seeks to preserve funding for education and other areas he considers crucial to the country’s long-term economic success.
Still, Plouffe said Obama is committed to doing more to slash the fast-rising cost of Medicare and Medicaid, to roll back George W. Bush-era tax cuts for those earning more than $250,000 and to even discuss changes to Social Security.
For Obama, the political stakes are high. He will be trying to convince voters concerned about the growing debt that he is serious about cutting government spending and Democratic allies that he will protect key government programs, while also working to ensure spending is not cut so much that it impairs economic recovery.
In a speech scheduled for Wednesday, Obama will present his most extensive response to date in the debate over controlling federal spending. White House advisers have been discussing for months whether he should take the lead on deficit and debt reduction, concluding that his best approach for beating back Republican proposals for much deeper cuts would be to put forward his own vision.
The new approach is coming as the president seeks a way to defuse a potentially damaging battle over how much the federal government can borrow. The debt limit is set to be reached in mid-May, and the government will be able to meet all of its obligations only through early July at the latest. Many Republicans have said they will not vote to increase the limit without significant cuts in spending.
The question hanging over Obama’s speech is whether it will contain specific new ideas for reducing spending, be a broad but not detailed endorsement of deficit reduction or just offer principles for working with Congress. Simply by putting Medicare and Medicaid on the negotiating table, the president appears to be taking a more comprehensive approach to deficit reduction than he has before.
White House and Treasury Department officials have been working on a potential overhaul of corporate tax policy, but it is unclear whether that will be part of a deficit reduction plan.
Although Obama has long acknowledged the importance of deficit reduction — there was a fiscal summit at the White House in the first months after he took office, and he appointed a fiscal commission to address the issue last year — he has not embraced the most ambitious plans to roll back borrowing.
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