President Obama is seeking an Aug. 1 deadline for overhauling the tax code and making changes to expensive federal health programs, the final pieces of what the administration conceives as a far-reaching plan to rein in the national debt, senior administration officials said Friday.
The proposed deadline was included in a plan Treasury Secretary Timothy F. Geithner delivered to Capitol Hill on Thursday as Obama's opening bid in talks with congressional Republicans to avert the year-end fiscal cliff.
That plan generally mirrors previous deficit-reduction plans Obama has submitted to Congress. In all, it would reduce borrowing over the next decade by $4.5 trillion, officials said. However, Obama is proposing to dedicate about $200 billion of those savings to new measures to boost the sluggish economy, including additional unemployment benefits and extension of a temporary payroll tax cut for most workers.
The overall figure includes about $1.2 trillion in savings already in force as part of previous spending agreements with the Republican House. The White House proposes to raise $1.6 trillion in fresh revenue, with about $1 trillion coming in January, with the expiration of the George W. Bush tax cuts for high earners.
An additional $600 billion in revenue would be generated next year through a rewrite of the tax code. And $600 billion in fresh savings would come next year, with a little more than half coming from Medicare and Medicaid changes, such as higher premiums for high-income beneficiaries.
To ensure that Congress acts by Aug. 1, Obama is proposing to delay automatic spending cuts only through that date. The so-called sequester would then act as a new trigger to force congressional action. Delaying the sequester for eight months would cost about $80 billion, officials said. They recommended covering that cost with new spending cuts and tax hikes, but did not specify which ones.