Breaking down Obama's proposed cuts

Spending cuts and debt reduction have become the dominant political mantras in Washington throughout the recent weeks, especially with both of the two “money-driven parties” recently introducing long-term debt reduction plans in order to “confront” the United States’ growing national debt.

Wednesday, during his speech at George Washington University, President Obama announced a plan to reduce the deficit by $4 trillion in the next 12 years. In the speech, Obama proposed a four-step approach in order to achieve his deficit reduction goal.

The first step in his approach to reducing the deficit is to “keep annual domestic spending low by building on the savings that both parties agreed to last week.”

The total in spending cuts would come to “about $750 billion dollars over 12 years” and would, according to journalist Patrick Martin, mainly be taken from areas like “education, the environment, transportation and other infrastructure, and in wages and benefits for federal government workers.”

The “savings that both parties agreed to last week,” to which Obama referred, included vicious cuts to social programs that are responsible for assisting low-income and middle-class families.

The second step in Obama’s four-step plan is to “find savings in our defense budget.” This is a step many Americans have been in favor of since the 1980s. Obama added that Secretary of Defense Robert Gates has already “courageously taken on wasteful spending, saving $400 billion in current and future spending.”

However, referring back to the report done by journalist Patrick Martin, cutting $400 billion dollars in defense spending during 12 years is “less than 4 percent of the gargantuan sum that the Pentagon, Department of Energy, Department of Homeland Security, CIA and other agencies will spend during that period on the armed forces, nuclear weapons and intelligence and security operations.”

The third step is to “further reduce health care spending in our budget” by cutting spending on prescription drugs “by using Medicare’s purchasing power to drive greater efficiency and speed generic brands of medicine onto the market.”

But according to a column written by Andrea Stone, experts familiar with the administration’s plans “say they doubt the president intends to resurrect the politically charged idea.”  

The phrase “politically charged idea” is an interesting one, considering polls have shown that approximately 85 percent of the public thinks using the government’s purchasing power to negotiate drug prices is something that ought to be done.   

Obama also announced that Washington was going to “reform” Medicare, even though 61 percent of Americans, a fairly large majority, say health care should receive only minor changes or no changes at all.      

The final step in Obama’s approach is to “reduce spending in the tax code.”

Yet, almost immediately after the proposal, Obama added that the country should also “reform our corporate tax code as well, to make our businesses and our economy more competitive.”

Considering that General Electric paid nothing in federal taxes last year, even though it earned $14.2 billion in profit, including a “$3.2 billion tax benefit,” it is not unreasonable for a person to wonder what exactly Obama has in mind so as to be able to make corporations “more competitive.”

As economist Paul Krugman recently highlighted, “Obama is conspicuously failing to mount any kind of challenge to the philosophy now dominating Washington discussion — a philosophy that says the poor must accept big cuts in Medicaid and food stamps.

The middle class must accept big cuts in Medicare (actually a dismantling of the whole program) and corporations and the rich must accept big cuts in the taxes that they have to pay.”

Obama’s long-term budget reduction plan appears to have very few differences from that of others which have been proposed.

“Squeezing the poor, while boosting the rich.” It would seem that philosophy is the core underlying principal of both political parties in Washington.

­— mardunba@indiana.edu