Obama: Follow My Debt Plan or I’ll Veto

Unwilling to compromise on tax breaks, he's challenging the GOP. Will it work?

President Obama (Getty)
President Obama (Getty)

Introducing his proposal to rein in the nation’s debt, on Monday President Obama essentially pitched congressional action as a choice: between the “wealthiest Americans and biggest corporations” and the “middle class and the poor.” The plan calls for more than $4 trillion in budget savings over the next decade, paying for the president’s $447 million American Jobs Act, giving specific recommendations for the $1 trillion in spending cuts already tasked to the bipartisan super committee under the debt-ceiling deal and proposing an additional $3 trillion in savings.

How? Through what the president repeatedly called a “balanced approach” that includes a mix of spending cuts and the elimination of tax breaks for the wealthiest Americans. The strategy is similar to the one he tried to push unsuccessfully this summer during the debt-ceiling debate.

“It was an approach that said we shouldn’t balance the budget on the backs of the poor and the middle class; that for us to solve this problem, everybody, including the wealthiest Americans and biggest corporations, have to pay their fair share,” the president said. “All told, this plan cuts two dollars in spending for every dollar in new revenues.”

On the spending-cuts side, among other trims, the president’s detailed proposal (pdf) includes:

* $1.1 trillion from the drawdown of troops in Afghanistan and Iraq

* $320 billion from Medicare and Medicaid, targeting overpayments, erroneous payments and wasteful spending (any cuts affecting beneficiaries would not be phased in until 2017)

* $33 billion from agricultural subsidies and programs, including a direct payment program that often pays large farms for crops that they no longer produce

* $42.5 billion in modifications to federal employee benefits programs

* $77.6 billion from improving the management of federal programs, including IRS tax enforcement and unemployment insurance, to reduce waste and erroneous payments