It was as much a political pep rally as it was a public-policy address, but President Obama’s deficit-reduction plan is now on the table and another contentious Washington debate is under way.
The president’s speech was heavy with partisan rhetoric and light on fiscal specifics — and what details there were stood in stark contrast with a GOP plan put forward by Rep. Paul Ryan, the House Budget Committee chairman.
* Obama proposes tax hikes for “millionaires and billionaires,” he says — though he’d also whack working families making as little as $250,000 a year.
Ryan calls for wide-ranging tax reform — reducing rates and simplifying the system. And while his plan would end most deductions, it would also sharply lower tax brackets.
* Obama seeks to cut Medicaid and Medicare costs via “greater efficiency” and “new incentives” and by “strengthening an independent commission” that will “recommend the best ways to reduce unnecessary spending.”
That’s pablum, of course, meant only to soothe fears as the president’s re-election campaign gets under way.
Ryan, meanwhile, proposes to fundamentally transform entitlements — one by one:
He’d transform Medicaid into a block-grant program — the same approach used for welfare reform in the ’90s — in which states receive a fixed sum of cash, ending the incentive for them to keep expanding the rolls.
And Medicare, in what has emerged as his most controversial recommendation, would be guided by consumer choice.
Ryan’s plan would reduce federal spending to 20 percent of gross domestic product within a decade.
And therein lies the basic difference.
As House Majority Leader Eric Cantor put it: “Most Americans understand that Washington doesn’t have a revenue problem — it has a spending problem.”
True enough, the president yesterday tried his best to paper this over — offering few facts and figures to bolster his proposals, while ripping enthusiastically into the Republicans’ plan.
Even more tellingly, there wasn’t one word in the president’s speech about real job creation — because that would have required a discussion of the corrosive effects of taxation on economic growth.
The good news, at least, is that Obama seems to accept the need for meaningful spending cuts.
Then again, he’s always done so rhetorically — it’s his actions that have an entirely opposite effect.
Most usefully, it’s hard not to come away from the speech without a relatively clear notion of where the two sides stand on the great issue of the coming campaign: reducing the federal deficit.
Obama wants to do it mainly via more taxes.
The Republicans want lower spending.
Let the contest begin.