It was a speech that did everything. It would anger Republicans; it would anger Democrats. It would sharpen the philosophical differences across the two parties; it would seek to strike a compromise between them. And more than anything it was another complex Obama-style answer to a looming national issue while at the same time being a powerful display of leadership by the United States President.
Speaking at a packed auditorium at George Washington University on Wednesday, U.S. President Barack Obama finally waded into the fierce debates over cutting the dangerous, $14-trillion deficit. In explaining his solution to the brewing fiscal crisis, he also laid out a vision for America that differed sharply from what he described as the “deeply pessimistic” vision of the Republican Party.
Proposing radical cuts across the budget and also savings through lower interest payments and lower subsidies, Mr. Obama said his approach would achieve $2 trillion in spending cuts across the budget, reduce interest payments on the debt by $1 trillion and call for tax code reform to the order of $1 trillion less in tax expenditures.
His plan would achieve these goals “while protecting the middle class, protecting our commitment to seniors, and protecting our investments in the future.”
Mr. Obama argued that his opponents' budget proposal “paints a vision of our future... that says if our roads crumble and our bridges collapse, we cannot afford to fix them. If there are bright young Americans who have the drive and the will but not the money to go to college, we cannot afford to send them.”
Mr. Obama's plan for budget austerity was lauded in some quarters, notably by liberal economists such as Paul Krugman, for seeking to make cuts to the defence budget and for refusing to further extend Bush-era tax cuts for the wealthiest Americans. Overall, the President argued that his plan would cut over $4 trillion over the next 12 years, still significantly less than the $6.2 trillion that the Republican proposals demanded.
However, as Mr. Obama himself admitted, his proposals would face resistance even within the Democratic Party, as he had pressed for cuts to mandatory programmes such as Medicare, Medicaid and Social Security.
He said these three policies alone accounted for two-thirds of spending, and so avoiding a cut to these was impossible.
Addressing concerns about cutting spending on these policies, he said “I guarantee that if we do not make any changes [to these three policies] at all, we will not be able to keep our commitment to a retiring generation that will live longer and will face higher health care costs than those who came before.”
