President Obama announced his plan to cut $4 trillion in debt over the next 12 years at George Washington University today. But how does his proposal compare to other ideas competing for oxygen in Washington?
Here's your one-page comparison of three key deficit reduction plans: the White House plan announced by President Obama, the 2012 budget announced by Rep. Paul Ryan's budget, and the official proposal of the president's fiscal commission.
White House: Find $4 trillion in savings in "12 years or less."
Paul Ryan: Find $4 trillion in savings by 2022
Deficit Commission: Find $4 trillion in savings by 2020.
White House: Save $750 billion in domestic spending over 12 years. Review military spending for further savings. Maintain or increase spending in medical research, clean energy technology, roads, airports, broadband access, education, and job training.
Paul Ryan: Bring non-security discretionary spending to below 2008 levels, resulting in a 33 percent cut in non-security discretionary spending in 2020 below the baseline. Reduce inefficient defense spending by $178 billion but reinvest $100 billion to achieve savings of $78 billion.
Deficit Commission: Cut $100 billion from defense and $100 billion from non-defense spending by 2015 by taking total spending down to 2008 levels over two years, and then limit growth to half the rate of inflation. Put special limits on war spending.
White House: Let the Bush tax cuts expire for "the wealthy," which will save more than $700 billion over ten years. Limit itemized deductions for the wealthiest 2% of Americans to reduce the deficit by an additional $320 billion over ten years. Convene a panel on tax reform. (Another part of the speech calls for "tax reform to cut about $1 trillion in spending from the tax code")
Paul Ryan: Extend the Bush tax cuts and enact tax reform. Repeal $800 billion in tax increases imposed by Affordable Care Act. Enact simpler, less burdensome tax code for households and small businesses. Consolidate and lowers tax rates for individuals so that the top rate comes down from 35 to 25 percent and pay for it by sweeping out deductions and exemptions. Lower corporate tax rate from 35 percent to 25 percent and pay for it by sweeping out tax expenditures.
Deficit Commission: Enact comprehensive tax reform. Consolidate and lower individual income rates to 12%, 22%, and 28%. Eliminate most tax expenditures that don't protect the low-income. Tax capital gains and dividends as normal income. Lower corporate income rate to 28%, eliminate most deductions, and move to a territorial tax system, which would not tax profits made by U.S. multinationals overseas.
White House: Keep the Affordable Care Act. Find $500 billion in additional savings by reducing waste, using Medicare's purchasing power to drive down prices, and work with governors to keep down Medicaid costs. Strengthen the independent Medicare advisory board to control costs in Medcare.
Paul Ryan: Repeal the Affordable Care Act. Starting in 2022, convert Medicare into a voucher program where the size of the voucher is sensitive to the senior's income and grows slower than health care inflation. Establish a medical savings account for low income beneficiaries. Convert Medicaid cost-sharing into block grants that increase according to population growth and inflation.
Deficit Commission: Keep most of the Affordable Care Act. Strengthen the independent Medicare advisory board. Reform the "doc fix" and pay for it by increasing cost sharing in Medicare. Establish a long-term budget for total health care spending that limits health care cost growth to GDP+1%.
White House: Unspecified changes: "both parties should work together now to strengthen Social Security for future generations."
Paul Ryan: Unspecified changes.
Deficit Commission: On benefits side: shrink Social Security checks by changing the benefits formula; slowly raise the retirement age to 69 by 2075; refine the cost-of-living measure used to increase Social Security checks every year. On the revenue side: raise the "ceiling" of taxable income to 90 percent of earnings; create higher minimum and old-age benefits.
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