Reducing the Deficit
The plan President Barack Obama's announced in April 2011 focuses on reducing debt in four key areas: discretionary spending, health care, security spending and other mandatory spending. While Obama stressed that he will not accept cuts that will compromise national security, he will consider Defense Secretary Robert Gates' assertion that the government could save $400 billion by 2023 just by cutting the fat in the Defense budget [source: White House]. As for other discretionary spending, the President aims to continue to build on the $400 billion he cut from his most recent budget, and cut non-security spending that should generate an additional $200 billion in savings over the next decade.
Health care is a major obstacle to deficit reduction. Here, President Obama has sought to fix runaway Medicare and Medicaid costs by reforming both programs by "reducing waste, increasing accountability, promoting efficiency and improving the quality of care." These reforms will save the federal government $340 billion over the 10 years and $480 billion by 2023. Obama's framework also plans to strengthen key reforms to both programs that were enacted under the Affordable Care Act, such as the Independent Payment Advisory Board (IPAB). This board would analyze and find ways to reduce Medicare costs if and when they get out of control. The President also plans cuts in unnecessary drug spending and improvements to patient safety standards that would save at both programs at least $50 million over the next 10 years [source: White House].
President Obama also made mandatory spending cuts beyond health care. Measures to reform agricultural subsidy programs, fix the federal pension system and the federal unemployment trust, and reduce fraud should save the federal government about $360 billion by 2023. The President also reinforced his commitment to protecting Social Security, rejecting Bush-era tax cuts for the wealthy, and instead calling on Congress to enact comprehensive tax reform that "produces a system that is fairer, has fewer loopholes, less complexity and is not rigged in favor of those who can afford lawyers and accountants to game it" [source: White House].
All in all, everything you need to know about the President's framework is right in its title: The plan "ensures that shared prosperity will keep the American dream alive for generations to come. A key component of that strategy must be a commitment to responsibility and living within our means." Is our federal government prepared to do just that -- and will the plan really work? Time will tell.
For more information on government spending, see the links below.
- Lee, Carol E. and Paletta, Damian. "Obama Unveils Deficit Plan." WSJ.com, April 14, 2011. (Accessed April 21, 2011.)http://online.wsj.com/article/SB10001424052748703385404576259903446373140.html
- The White House. "Fact Sheet: The President's Framework for Shared Responsibility and Shared Fiscal Responsibility." April 13, 2011. (Accessed April 13, 2011.)http://www.whitehouse.gov/the-press-office/2011/04/13/fact-sheet-presidents-framework-shared-prosperity-and-shared-fiscal-resp