- President Obama's Deficit Reduction Plan
- September 22, 2011 | Author: B. Jeffrey Brooks
- Law Firm: Adams and Reese LLP - Washington Office
- President Obama introduced his deficit reduction plan today. In it, he detailed various initiatives to fund his previously-released jobs plan and potentially produce a net savings of $3 trillion. The deficit reduction measures stem from discretionary cuts from the Budget Control Act, cuts and reforms to mandatory programs, the drawdown of troops from Afghanistan and Iraq, tax reform, and additional interest savings.
In addition to the ongoing deficit reduction measures from the Budget Control Act, the President focused on fiscal reforms in the Medicare and Medicaid programs. President Obama suggested that savings can be achieved by reducing wasteful spending and overpayments, while improving the quality of care in those programs. According to the President's plan, changes affecting Medicare/Medicaid beneficiaries would not begin until 2017. Additionally, President Obama threatened to veto any bill that would reduce Medicare benefits without meaningful tax reforms, particularly for the highest tax bracket.
The President's deficit reduction plan also calls for the Congressional Joint Committee to consider comprehensive tax reform. This call has been echoed by a bipartisan group of 34 Senators and the Speaker of the House. However, President Obama has endorsed a measure called the "Buffett Rule." The "Buffett Rule" states that people making more than $1 million per year should not pay a smaller share of income taxes than individuals in the middle class. This "rule" represents the division between Democrats and Republicans on deficit reduction measures.
While agreeing with the President on the need to overhaul the tax system, Republicans oppose the idea of tax increases as a mechanism for deficit reduction. The GOP favors lowering individual and corporate tax rates as a way to spur the economy, thereby reducing the nation's deficit.
Recently, we released memos regarding "The American Jobs Act" and the Republican's response. As always, we will continue to monitor this and update you accordingly. Please do not hesitate to contact us if we can be of additional assistance.