President Obama announced his deficit reduction plan today and was immediately attacked by Republicans. But wait a second, there are some great things in the plan. Things that even Republicans can love.
Here are the details:
War savings: $1.1 trillion.
The administration is counting the reduction in spending in Iraq and Afghanistan over the next decade that will result from the planned drawdown of troops and the changing nature of the operations in those countries. Okay so Republicans may not love that news, but I do. Anything to end those wars that have lost their purpose is great with me
I give this portion of the plan an A +
Tax revenue: $1.5 trillion.
Of the total revenue raised by tax changes, $800 billion would be realized by letting some of the Bush-era tax cuts expire for high-income households -- something Obama has called for repeatedly.
Another $400 billion would result from capping the value of itemized deductions and other exemptions for high-income households.
The remaining $300 billion would come from closing various tax loopholes, a senior administration official said.
Allowing the Bush Tax cuts to expire will not fly with the Republicans in Congress and President Obama knows that. He is making this proposal to placate the democratic base going into the 2012 elections. But he made this same promise before the 2008 campaign and didn't end the Bush Tax Cuts when he had the chance, why should the base believe him now?
The Republicans have made tax reform proposals, so some of this will fly. I give this part of the plan a C - with a note "Incomplete."
Interest savings: $430 billion.
Whenever policies are changed to lower future deficits, those deficits are reduced in part because of the interest costs that will be saved from less borrowing. Another A +
By now you may be asking where are the spending cuts? Well you really have to squint to see them in this plan.
Mandatory spending cuts: $580 billion.
Of the total cuts in mandatory spending, $248 billion will come out of Medicairs. And about 90% of those savings will come from reducing overpayments in the system, a senior administration official said. He added that any changes to Medicare benefits won't kick in before 2017.
Another $72 billion will come from Medicaid and other health programs.
The plan also includes $250 billion in savings from other mandatory programs. They include $33 billion in savings from farm subsidies; $42.5 billion from federal worker benefit programs, including those for civilian workers and military personnel; and $92.2 billion the administration estimates it can save from "restructuring government operations and reducing government liabilities."
Truthfully, this part of the plan is a little fuzzy. I give it a D with a note "Needs More Work" - Actually, just "Needs More."
The timing of this speech is suspect. We just had a big deficit debate. Where was the plan then? And what about the bi-partisan, Congressional, Super Committee that the President agreed to? They just started work on their plan. This undercuts them.
So the President's speech today seems more like a campaign speech. But so what? The Republicans and The Super Committee would do well not to ignore the President's better late than never plan. There is a lot of good in it and a lot to build off of. To ignore it would not only be bad politics, it would be bad for the country.
