Yesterday, President Obama released his debt-reduction plan or "framework," as the White House calls it, because it's so vague in a big speech at George Washington University, offering the nation a stark contrast to the plan unveiled by Wisconsin congressman Paul Ryan last week. Just as we did for Ryan's plan, we've put together an FAQ on Obama's proposals for people who really don't understand this at all.
Another budget plan?
Please tell me it's basically the same thing as the Paul Ryan one.
I’m sorry, it’s quite different.
Okay FINE — how much does this one cut?
Four trillion dollars over twelve years, compared to $4.4 trillion over ten years in the Ryan plan.
Sounds like Ryan wins.
Ryan’s plan cuts more money and faster, but he does it in different ways — ways, which, depending on your viewpoint, might be better or worse.
Right, I know, Ryan’s plan gives old people coupons for Lanacane .
Medicare, yes. Obama’s plan, however, preserves Medicare in its current form as a government-run health-insurance program for the elderly. He hopes to save money by further empowering the Independent Payment Advisory Board — a board of health-care experts appointed by the president and confirmed by Congress, which was created in the health-care reform legislation of last year — to figure out ways to hold down costs without rationing care or raising premiums. How they'd actually do that remains to be seen, but the health-care reform law has authorized various pilot programs to try to figure it out. The idea, though, is that instead of saving money by forcing old people to pay more, as in Ryan's plan, Obama hopes to lower costs entirely. The plan would also use Medicare's purchasing power to make prescription drugs cheaper.
What about the other one, Medicaid, which I like to think of as Medicare's impoverished grandson.
Basically, Obama wants to reward states that run the program more efficiently. He also called upon the National Governors Association to "make recommendations for ways to reform and strengthen Medicaid." Again, pretty vague at this point.
Anything not vague in this plan?
The tax plan is slightly less vague. Obama drew a line in the sand yesterday, declaring that he would refuse to renew the Bush tax cuts for the wealthy a second time. Like Ryan, he also wants to simplify the tax code and get rid of expenditures — loopholes, deductions, exemptions, and so on — which save people money but provide the government with less tax revenue.
So he's raising taxes.
Sort of. The Bush tax cuts expire on their own in 2012 if Congress does nothing. Though Obama doesn't want to renew them for the wealthiest 2 percent of Americans, he does want to renew them for everyone else. Which means passing a new tax cut through Congress. As the Washington Post's Ezra Klein writes, the "sum total of their policy" actually "amounts to large tax cut when compared to current law." Just not for the top 2 percent.
Am I in the top 2 percent?
It would really depress me if you were.
So besides Medicare, Medicaid, and taxes, what else is different about the Obama plan?
Ryan's plan left national-defense spending untouched, while Obama calls for a cut of $400 billion over twelve years.
Oh no! Won’t that leave us vulnerable to the Germans?
To the who?
I don’t think they’re a huge concern anymore. But sure, there’s always going to be some kind of trade-off when you spend less on national security. Every nation has to choose between guns or butter, and Obama wants to move us slightly toward the butter.
So we’d have more butter — that’s good at least.
Michelle Obama won’t be pleased, though.
Anyway … by cutting $400 billion from defense over the course of twelve years, the United States will go from the most expensive military in the world by far to … still the most expensive military by far. But the proposal is still controversial. Defense Secretary Robert Gates only supports cuts half as deep, and a Pentagon spokesman remarked yesterday, “It is important that any reduction in funding be shaped by strategy and policy choices, and not be a budget math exercise.”
At the same time, though, I heard that Obama's plan calls for more triggers. How will the Army afford them with these cuts? And doesn't Obama support gun control? And —
I'm going to stop you there. The trigger you're referring to isn't an actual trigger, as on a gun. It's a fail-safe that would "trigger" automatic spending cuts — though Medicare, Medicaid, and Social Security would remain off limits — if the rest of the proposals don't pan out and deficits are not declining in comparison to GDP.
The guys who sang "How Bizarre"?
That was OMC. Nice nineties reference, though.
I still listen to that song all the time.
Kind of disturbing.
So this "trigger," which isn't actually a real trigger — will it work?
If previous attempts are any indication, no, it won't. In the eighties, Congress passed the Gramm-Rudman-Hollings Balanced Budget Act, which was essentially the same trigger Obama is proposing now, and Congress found ways around it. But I guess it's better to have a trigger that may or may not work than no trigger at all.
Anything else Obama wants to cut?
The plan calls for savings of $700 billion in nonsecurity discretionary spending — basically the 12 percent or so of the budget that isn't wrapped up in Medicare, Medicaid, Social Security, and national defense — and another $360 billion in mandatory spending programs like agricultural subsidies and the federal pension insurance system.
So how liberal is this plan? Super liberal or mega-super liberal?
Actually, many liberals, as Obama mentioned in his speech, don't believe we should be focusing on the debt right now at all, but instead focusing on stimulating the still-sluggish economy. The very acceptance that the government should shrink at this moment is in itself somewhat conservative.
In that case, will the Democrats and Republicans be able to find common ground?
Ideally, Democrats and Republicans would hammer out a compromise plan, and the national debt would gradually decrease over time, and everyone would be happy. Realistically, especially with the presidential campaign heating up, they will just bicker, villianize each other, and accomplish nothing.
You're listening to it right now, aren't you?