Obama: Cut spending, raise taxes on the wealthy

WASHINGTON -- President Barack Obama coupled a call for $4 trillion in long-term deficit reductions with an attack on Republican plans for taxes, Medicare and Medicaid on Wednesday, laying down markers for a debate in Congress and the 2012 presidential campaign.

Obama said spending cuts and higher taxes alike must be part of any deficit-reduction plan, including an end to Bush-era tax cuts for the wealthy. He proposed an unspecified "debt failsafe" that would go into effect if Congress failed to make sure the national debt would be falling by 2014 relative to the overall economy.

"We have to live within our means, reduce our deficit and get back on a path that will allow us to pay down our debt," Obama said in a speech a few blocks from the White House at George Washington University. "And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs and win the future."

Republicans want to "end Medicare as we know it," he said, and to extend tax cuts for the wealthy while demanding 33 million seniors pay more for health care.

"That's not right, and it's not going to happen as long as I am president," he said.

Obama spoke to an audience that included Rep. Paul Ryan, R-Wis., author of the House Republican budget. The Budget Committee chairman later told reporters he had been excited to receive an invitation to the speech, believing the administration was extending an olive branch.

"Instead, what we got was a speech that was excessively partisan, dramatically inaccurate and hopelessly inadequate to addressing our country's pressing fiscal challenges," Ryan said.

Speaker John Boehner said the administration has asked Congress to raise the debt limit, but said, "the American people will not stand for that unless it is accompanied by serious action to reduce our deficit. More promises, hollow targets and Washington commissions simply won't get the job done."

Obama spoke less than a week after he reached a compromise with Boehner on a package of $38 billion in spending cuts for this year just in time to avoid a partial government shutdown. Both houses of Congress are expected to pass the measure soon.

Of $4 trillion in cuts, Obama said $2 trillion should come from spending, $1 trillion from taxes, including ending Bush-era tax breaks for the wealthy, and the rest recouped from lower interest payments on the national debt.

Administration officials said military spending would be reduced by $400 billion through 2023, domestic programs would absorb $770 billion in cuts and mandatory programs such as agricultural subsidies another $360 billion.

An additional $480 billion would be saved from Medicare, which provides health care principally to 33 million seniors, and from Medicaid, a state-federal program that covers lower-income families and is ticketed for a huge expansion under the health care program Obama signed into law last year.

Obama made no recommendations for savings from Social Security, which he said is neither in a crisis nor " a driver of our near-term deficit problems." He said he supports unspecified steps to strengthen it for the long term, but ruled out any attempt to privatize it.

Neither Obama nor his aides distributed any detailed accounting of the effect of his recommendations on the deficit, which is expected to top $1.5 trillion this year, or the debt, now more than $14 trillion.

Obama saved some of his sharpest rhetoric for Republican proposals to end traditional Medicare for anyone currently under 55, and to give the states near-total control over Medicaid.

For Medicare, he said, "It says instead of guaranteed health care, you will get a voucher. And if that voucher isn't worth enough to buy insurance, tough luck -- you're on your own."

He said the Republican budget could cost 50 million Americans health care coverage in all, including grandparents needing nursing home care, children with autism and kids "with disabilities so severe that they require 24-hour care. These are the Americans we'd be telling to fend for themselves."

The debt has grown for much of the past few decades, with the exception of a brief period after President Bill Clinton and Republicans in Congress reached a compromise that permitted payments to reduce it.