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Obama Debt Speech: Tax Increases, Medicare Changes Included In President's Plan

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WASHINGTON -- In an effort to recast the debate over the nation’s fiscal future, President Barack Obama announced on Wednesday a plan to reduce the deficit by $4 trillion over 12 years. The plan was put together largely from the outline produced by his own deficit commission co-chairs.

The proposal, which comes as House Republicans get set to vote on a budget of their own and a bipartisan group of six Senators chart their own deficit-reduction framework, includes a mixture of tax hikes, drastic spending cuts, reductions in the Pentagon’s budget and smaller entitlement reforms. It would seek to achieve a final balance of three dollars in spending reductions for every dollar generated in additional tax revenue.

"Now that our economic recovery is gaining strength, Democrats and Republicans must come together and restore the fiscal responsibility that served us so well in the 1990s," the president said in a speech at George Washington University. "We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt. And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs and win the future."

In a nod to the likelihood that a compromise won’t be reached, President Obama also included a “debt fail-safe” trigger, mandating that Congress pass across-the-board spending reductions if the nation’s debt is not on a declining path as a share of the economy by the second half of the decade.

“The exact design of that we would have to work out, obviously,” said a senior administration official, previewing the President’s speech. “I think what is important is the idea. [...] The goal of a fail-safe is actually to give confidence that no matter what happens, a degree of deficit reduction will be met,” the official said.

White House advisers projected the president’s fiscal framework would reduce deficits as a share of the economy to about 2.5 percent of GDP by 2015.

The politics surrounding the proposal appeared almost immediately complicated. Even before the President announced his plan, Congressional Republican leadership, fresh off a White House meeting of their own, hosted a press conference in which they announced a tax hike to be a non-starter in negotiations and re-affirmed their commitment to the budget proposal introduced by House Budget Committee Chairman Paul Ryan (R-Wisc.).

In his Wednesday speech, Obama took on the Ryan approach in harsh terms, calling it a vision that would see "roads crumble and bridges collapse," young Americans unable to go to college, seniors left uncared for, Medicare ended, and 50 million Americans left without health insurance.

"The fact is," said Obama, "this vision is less about reducing the deficit than it is about changing the basic social compact in America."

And yet, the president also acknowledged in his speech that not all Democrats are enamored with his approach. Indeed, officials both on and off the Hill, expressed skittishness with many aspects of the administrations plan, chief among them the $1-to-$3 revenue-to-spending cut ratio.

“The three-to-one ratio is the big issue,” said one high-ranking Democratic congressional aide. “It’s to the right of many [Democrats].”

Even members of the President’s own deficit commission were worried that the new blue-print, while demonstrating admirable leadership from the administration, came up a touch short in terms of shared sacrifice. Former SEIU president Andy Stern wrote in an email to The Huffington Post that the plan failed to promote “responsibility for our country's largest corporations to pay their fair share and contribute to deficit reduction.” It also, Stern warned, did not set aside “obvious capital for investment to Win the Future” -- a reference to the presidential motto for job-creation.

The disagreement and debate seemed at odds with the president's actual plan, which stayed closer to broad themes than policy specifics.

According to a fact sheet sent out by the White House, the President would set “a goal” of holding the growth in base of security spending below inflation, which would save $400 billion by 2023. This would be “in addition to the savings generated from ramping-down overseas contingency operations” -- in other words: ending the wars in Afghanistan and Iraq would only help reduce the deficit. But if the fail-safe trigger were to come into play, the administration said that national security spending would not be subjected to the mandatory cuts. The total savings, Stern notes, fall short of those proposed by Rep. Barney Frank’s (D-Mass.) Sustainable Defense Task Force report on Pentagon spending.

Under the Obama proposal, non-security discretionary spending would be cut to levels that would save $770 billion by 2023. In addition, there would be cuts to mandatory spending with the goal of achieving $360 billion in savings in that same time frame. The tax system would be simplified and the savings would be used to pay for lower corporate rates. In addition, the income tax rates on the highest earners (families making over $250,000 a year) would revert to pre-George W. Bush rates.

On Social Security, the Obama proposal is most vague, expressing that the retirement program is neither in crisis nor a contributor to the nation’s “near-term deficit problems.” But the president said Social Security should be reformed for long-term results. How it would be changed, the fact sheet doesn’t say, except to note that Obama “supports bipartisan efforts to strengthen Social Security for the long haul.”

On Medicare, the president’s vision is similarly broad. Obama rules out a voucher system as envisioned by Rep. Ryan. The senior administration official who previewed the speech said the president “does not support raising the Medicare retirement age.”

"I will preserve these health care programs as a promise we make to each other in this society," Obama said in his speech. "I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs."

Instead, the administration is choosing to build off the legislation passed during Obama's second year in office. His proposal calls for setting “a more ambitious target” to hold down Medicare cost growth and reducing excessive spending on prescription drugs -- one of the few specifics that got cheers from progressive advocates briefed on the plan. In order to get there, the president proposes strengthening the Independent Payment Advisory Board, which is tasked with finding excessive and unnecessary spending within the system.

This story has been updated to include elements of President Obama's speech. Follow further updates on the live blog below.

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From the ABC World News interview:

George Stephanopoulos: I know you just told Erskine Bowles and Senator Simpson, you want to get these talks moving right away. But boy, it doesn’t sound like it’s going to be easy. Paul Ryan. Spent a lot of time with him yesterday. The Congressman has really come out with a tough response to your speech. Let me-- I want to quote it exactly. He said, "The President was excessively partisan, dramatically inaccurate, and hopelessly inadequate. Instead of building bridges, the President is poisoning wells." Are you poisoning wells?

President Obama: Oh, absolutely not. Look if you look at my speech yesterday it was not so much a critique of what the House Republicans have proposed as it was a description of what they’ve proposed.

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Video courtesy of ABC World News:

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HuffPost's Laura Bassett reports:

The U.S. House of Representatives passed a resolution to bar all federal funding to Planned Parenthood on Thursday, but the Senate rejected the proposal a few hours later by a vote of 58 to 42. Five Republican senators -- Massachussetts' Scott Brown, Alaska's Lisa Murkowski, Illinois' Mark Kirk, and Susan Collins and Olympia Snowe, both from Maine -- voted against the resolution, which was a “technical correction” to the budget bill that passed last week without the Planned Parenthood rider. Ten House Democrats voted in favor of the resolution, which passed the House by a vote of 241 to 185. “It’s clear that Republicans do not support family planning. It’s hard to understand, but it’s clear that they don’t, and have used debate on this bill to spread misinformation about the critical work that Planned Parenthood does on behalf of America’s women every day,” Minority Leader Nancy Pelosi (D-Cali.) said on the House floor. “Today’s legislation, which has no chance of passing the Senate and becoming law, thank God, is just part of the Republican agenda that is the most comprehensive and radical assault on women’s health and reproductive freedom in our lifetime, and that’s saying something.” Watch full video of Pelosi’s speech here:

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Reuters reports that without bill approval, funding for agencies may have expired:

The Congress on Thursday approved billion in spending cuts this year as part of a bill to fund the federal government through September 30, sending the legislation to President Barack Obama to sign into law.

After months of wrangling between Democrats and Republicans, the Senate voted 81 to 19 in favor of the budget bill for the rest of this fiscal year. Passage came shortly after the House of Representatives voted 260-167 for the measure.

Without approval of this bill, U.S. government funding for most agencies would have expired at midnight on Friday.

More here.

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The Washington Post offers a graph of how the House voted on the 2011 budget (260-167 in favor). View the graph here.

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The Hill reports that the Senate has passed the spending bill in an 81 to 19 bipartisan vote:

H.R. 1473 will cut .9 billion from the remaining six-months of the 2011 budget if it is signed by President Obama as expected.

"It represents bipartisan agreement reached between leaders in the House, the White House and the Senate with the details being worked out by members of appropriations,” said Sen. Daniel Inouye (D-Hawaii) in calling on his colleagues to support the bill Thursday afternoon. “It includes cuts bigger than what I was comfortable with, but it is dramatically superior to what passed through the House months ago and equally superior to not passing a budget."

More here.

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The Hill reports that the Senate has defeated resolutions to block funding for Planned Parenthood and healthcare:

The Senate on Thursday defeated two resolutions to amend the fiscal year 2011 spending bill that would have blocked funding for Planned Parenthood, and all funds to implement last year's healthcare reform law.

The House passed both resolutions just hours before.

Votes on the defunding measures in both the House and the Senate were a condition Republicans insisted upon as part of last week's agreement with the White House and Democrats on funding for the rest of FY 2011.

The Senate defeated the Planned Parenthood amendment by a 42 to 58 vote. The House passed that resolution 240-185.

The Senate defeated the bill to defund the healthcare law, 47 to 53. The House passed that resolution 245-189.

Both measures were required to meet a 60-vote threshold.

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ThinkProgress posts on Twitter:

@ thinkprogress : Senate rejects defunding Planned Parenthood 42-58. 5 Republicans voted no.

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Rep. Nancy Pelosi speaks out against GOP efforts to defund Planned Parenthood. The caption under the video reads:

Today, House Republicans passed H.Con.Res. 36, a concurrent resolution that would "correct the enrollment" of the Continuing Resolution (H.R. 1473), by adding a section at the end of the bill to defund Planned Parenthood. Cutting off federal funding for Planned Parenthood would have a devastating impact on women's health care across the country.

Planned Parenthood health centers currently provide preventive services to millions of women in need of health care, including the provision of contraception, cancer screenings, breast exams, and HIV testing.


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HuffPost's Jason Linkins reports:

Lindsey Graham has styled himself as the Senate's great dealmaker -- the guy who will shepherd your measure through the partisan thicket and make sure it passes. All you have to do is do everything precisely the way Graham imagines it needs to be done, and you'll be fine. But the moment you hit one of his cryptic procedural tripwires -- ones you often didn’t know were laid in the first place -- Graham goes into full-on snit-fit mode, and vows to use whatever means at his disposal to shut the whole process down.

He's doing it again over the budget deal that was wrought April 8, because it cut an allocation that was to be used to fund an Army Corps of Engineers project that would have deepened the Port of Charleston.

Read more here.

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President Obama offered the following statement on Thursday, provided by the White House Press Office:

“Today, I was pleased to take another step to relieve unnecessary burdens on small businesses by signing H.R. 4 into law. Small business owners are the engine of our economy and because Democrats and Republicans worked together, we can ensure they spend their time and resources creating jobs and growing their business, not filling out more paperwork. I look forward to continuing to work with Congress to improve the tax credit policy in this legislation and I am eager to work with anyone with ideas about how we can make health care better or more affordable.”

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The White House has provided the following press release:

On Thursday, April 14, 2011, the President signed into law:

H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011,” which repeals the expansion in the Affordable Care Act of requirements for businesses to report information to the Internal Revenue Service on payments for goods of 0 or more annually to other businesses and increases the amount of overpayment subject to repayment of premium assistance tax credits for health insurance coverage purchases through the Exchanges established under the Affordable Care Act.

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CNN radio reporter Lisa Desjardins writes on Twitter:

@ LisaDCNN : SENATE VOTES 47-53 against defunding the health care bill.

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ThinkProgress reports that Sen. Grassley has flip-flopped on his debt ceiling position:

Sen. Chuck Grassley (R-IA), in keeping with other GOP lawmakers, recently stated that the GOP should not vote to increase the debt limit unless Democrats and President Obama make major concessions on federal spending cuts. That position, however, is exactly opposite the one he took in 2006, when he urged his Senate colleagues to unanimously vote to increase the debt limit, saying it should not be used “to control government debt and deficits.”

More here.

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@ senatus : Budget votes, beginning w/ correcting resolutions, now underway in the Senate.

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The Associated Press reports:

WASHINGTON – President Barack Obama has signed the first rollback of last year's health care law, a bipartisan repeal of a burdensome tax-reporting requirement that's widely unpopular with businesses.

The bill Obama signed Thursday repeals a provision that would have forced millions of businesses to file tax forms for every vendor selling them more than 0 in goods each year, starting in 2012. The filing requirement is unrelated to health care. However, it would have been used to pay for part of the new health law by ensuring that vendors pay taxes.

Republicans hope it is the first of many such bills, resulting in the entire health care law being scrapped. Democrats say the bill is part of an inevitable tinkering that will be needed to improve the health measure.

More here.

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HuffPost's Elise Foley reports:

Nearly half of the House Republicans who opposed a budget deal on Thursday were freshmen, many of whom were voted into office in November by a surge in support for Tea Party candidates.

The “no” votes from GOP freshman only made up about 30 percent of the overall class, most of which supported the bill. Still, a number of freshmen said they were disappointed by the deal struck last week by House Speaker John Boehner (R-Ohio), Senate Majority Leader Harry Reid (D-Nev.) and the White House.

The final deal cut about billion from current spending levels -- much of it through budget gimmicks -- and blocked funding to certain programs. But the scope and level of the cuts were far lower than in the original House funding bill, which would have cut about billion from the 2011 budget and slashed funding for Obama’s health care law, Planned Parenthood, and the Environmental Protection Agency.

For some freshmen Republicans, already skeptical of the deal, the final nail in the coffin was a report on Wednesday that claimed the bill cut only 2 million from the deficit this year -- a far cry from the billion promised.

“It certainly didn’t help,” Rep. Bill Huizenga (R-Mich.) said of the article.

Rep. Allen West (R-Fla.) told HuffPost he was disappointed with “a lot of things” about the funding deal, from the closed-door negotiations to the final total cut.

“The numbers continued to dissipate. We came here and people said 0 billion, then it goes down to 61, then it goes down to this, and it goes down to that,” West said before the vote. “We’re letting the American people down.”

Huizenga, West and 26 other freshmen joined with longer-serving conservative Republicans such as Reps. Jim Jordan (Ohio), Steve King (Iowa), Michele Bachmann (Minn.) and Mike Pence (Ind.) to vote against the bill.

Other freshmen GOP members said they were unhappy with the final deal, but would still support it. Pennsylvanian Rep. Lou Barletta said he was displeased with cuts to the Low Income Home Energy Assistance Program, but had to swallow concerns to support the bill.

“It’s not perfect, but it’s certainly far from what they would like to do around here, and that’s spend more,” he said referring his Democratic rivals.

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The Associated Press writes:

WASHINGTON — Tough re-election campaigns looming, a handful of moderate Senate Democrats on Thursday choose between voting to cut off funds for President Barack Obama's health care law or showing their continued their support for the increasingly unpopular law.

The deal on the spending bill struck by Obama, Speaker John Boehner, R-Ohio, and Senate Majority Leader Harry Reid, D-Nev., requires a separate vote on cutting off money for the year-old health care overhaul. The effort is expected to fall short in the Senate, but it will put lawmakers on record – a prospect Republicans looking ahead to 2012 relish.

Moderate Democrats such as Sens. Claire McCaskill of Missouri, Jon Tester of Montana and Ben Nelson of Nebraska stood with Obama and Democratic leaders in endorsing the health care law. Abandoning it now would draw charges of flip-flopping while voting to keep the cash flowing could engender voters' wrath.

"People are going to have to make a tough choice, but they're going to be held accountable either way," said Sen. John Cornyn of Texas, chairman of the committee that helps Republicans get elected to the Senate.

Referring to the original votes on the law, Cornyn said, "It's a dilemma of their own making."

McCaskill, Tester and Nelson have drawn GOP rivals in states that either trend heavily Republican (Montana and Nebraska) or stand as electoral battlegrounds (Missouri). Freshman Sen. Joe Manchin has no announced foes in West Virginia and remains popular, but his state voters strongly backed Republican presidential nominee John McCain over Obama by 13 percentage points in 2008.

More here.

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HuffPost's Amanda Terkel reports:

With many pro-choice advocates upset that the budget deal included restrictions on access to abortion in D.C., 33 Democratic House members voted against the legislation today. One of those lawmakers was House Minority Leader Nancy Pelosi (D-Calif.), who tweeted, "I voted no on the CR today-we can do better by women, students, #DC and investing in our future."

Thirteen Democratic women voted for the bill.

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HuffPost Blogger Rep. Carolyn Maloney writes:

The Republicans seem to have a bit of a problem these days with truth in advertising. Because, for all their nice soundbites and talking points about reducing the deficit and creating jobs, the Republican Roadmap to Prosperity is most notable for two things. If followed, it would increase the deficit and kill American jobs.

The GOP's widely advertised, surefire method of deficit reduction is not unlike those late night TV infomercials that claim "you can shed those ugly pounds fast without dieting or exercise!" Ask any real doctor and they will tell you that without a responsible program of exercise and diet, the only surefire path to weight loss would be disease. And in fact, a grim variety of social illness is pretty much what the Republicans are pitching. They are trying to sell you a plan to put all the burden of getting our financial house in order on the middle class, the poor, the disadvantaged, the infirm and the elderly.

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CNN reports on elements of the budget deal agreed upon in the House today:

Under the deal, .5 billion would be from the budget for the remainder the fiscal year, which ends September 30. Among other things, the package slashes funding from a wide range of domestic programs and services, including high-speed rail, emergency first responders, and the National Endowment for the Arts.

As part of the agreement, Congress is also scheduled to vote Thursday on measures to de-fund Planned Parenthood and Obama's health care overhaul. While the bills are expected to pass the House, they have virtually no chance of clearing the Democratic-controlled Senate.

One point of concern for conservatives was a report released Wednesday by the non-partisan Congressional Budget Office showing that of the .5 billion in savings, only 2 million will actually be realized this fiscal year. Boehner insisted Thursday that all of the cuts will take effect eventually, but conceded that the analysis "has caused some confusion" among House members.

"There are some who claim that the spending cuts in this bill ... are gimmicks," he said on the House floor. "I just think it is total nonsense. A cut is a cut."

More here.

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HuffPost's Jason Linkins writes:

Wednesday, Politico offered President Obama some advice on how to approach his afternoon deficit speech in a piece titled "7 things Obama needs to do." And for some reason, MediaMatters' Simon Maloy actually read the damn thing, and was surprised to learn that the piece actually offered all sorts of conflicting advice -- almost as if Politico should maybe stay out of this whole "advice to presidents" game.

How conflicting was it? In the second paragraph, they advise the president to "signal to Republicans that he's open to compromise." In paragraph 5, they caution "no matter what Obama says Wednesday, he won't go far enough to satisfy most Republicans." Which would tend to make the whole "signalling an openness to compromise" part a pretty useless endeavor.

More here.

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Politico reports that Republicans had to reach out to Democrats in order to pass Thursday's vote in the House:

Minority Whip Steny Hoyer (D-Md.) stepped forward to support the package together with old Democratic allies on the House Appropriations Committee. Across the aisle, Speaker John Boehner (R-Ohio) — who bore the brunt of the dissent as fellow leaders stood silently by — bluntly told his colleagues: “This is the best we could get out of divided government.”

With 59 Republicans defecting, Boehner and Majority Whip Kevin McCarthy (R-Calif.) knew that help was needed, but the dynamics were such that Democrats held back to milk the crisis facing the GOP. Ultimately 81 Democrats — many of whom had planned to do so all week — joined in support, but the majority only cast their votes in the final minute.

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ABC News Correspondent Jonathan Karl writes on Twitter:

@ jonkarl : Initial count: 60 Republican freshman voted YES on the spending deal. Only 27 voted no.

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HuffPost's Jon Ward writes on Twitter:

@ jonward11 : RT @sethdmichaels: RT @2chambers The deal has passed, 260 to 167. With six not voting. 59 Rs voted no, 81 Dems voted yes.

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@ NancyPelosi : I voted no on the CR today-we can do better by women, students, #DC and investing in our future.

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The Washington Post writes about the budget deal recently approved by the House:

Eliminating any threat of a government shutdown until the fall, the House on Thursday approved a funding plan that reduces federal agency budgets by more than billion for the second half of the year.

On a 260-167 vote, a bipartisan coalition supported the plan, as conservatives revolted over what they considered budgeting gimmicks and liberals opposed the plan as too draconian in its impact on programs that benefit lower-income individuals.

The Senate will take up the measure Thursday evening and is expected to pass it on a large bipartisan vote, sending it to the White House for President Obama’s signature in time to meet the Friday midnight deadline for when the current funding resolution expires.

More here.

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The House has passed the budget bill: 260-167.

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HuffPost's Sam Stein writes on Twitter:

@ samsteinhp : this thing passed.

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HuffPost's Jon Ward writes on Twitter:

@ jonward11 : CR now has 218 votes and will pass barring some unforeseen change in votes. shutdown averted.

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