The punchline is that he wants to "achieve 4 trillion in deficit reduction over the next twelve years."
How? Four things:
The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week – a step that will save us about $750 billion over twelve years. We will make the tough cuts necessary to achieve these savings, including in programs I care about, but I will not sacrifice the core investments we need to grow and create jobs.Great! What do you plan to cut? What are the "tough cuts" here? You would expect that to come next, wouldn't you? But he continues with this:
We’ll invest in medical research and clean energy technology. We’ll invest in new roads and airports and broadband access. We will invest in education and job training. We will do what we need to compete and we will win the future."Invest" sounds suspiciously like another word for "spending." There is nothing to see here except more spending and some TBD "tough cuts." What's step two?
The second step in our approach is to find additional savings in our defense budget... Just as we must find more savings in domestic programs, we must do the same in defense. Over the last two years, Secretary Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again. We need to not only eliminate waste and improve efficiency and effectiveness, but conduct a fundamental review of America’s missions, capabilities, and our role in a changing world. I intend to work with Secretary Gates and the Joint Chiefs on this review, and I will make specific decisions about spending after it’s complete.It's nice to see that Secretary Gates is taking some responsibility in trying to reduce spending. Is Congress going to do the same? All right, so $400 billion (at least) from defense. That's fair. What's step 3?
The third step in our approach is to further reduce health care spending in our budget.A very hot topic.
Already, the reforms we passed in the health care law will reduce our deficit by $1 trillion.That's a slight exaggeration according to the Congressional Budget Office. So, I guess that accounts for $1 trillion of the $4 trillion, which doesn't amount to any kind of a cut at all, and is in fact a funny number.
My approach would build on these reforms. We will reduce wasteful subsidies and erroneous payments.Raise your hand if you think the government is capable of reducing wasteful subsidies and erroneous payments. They've done such a great job at it in the past, haven't they?
We will cut spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency and speed generic brands of medicine onto the market. We will work with governors of both parties to demand more efficiency and accountability from Medicaid.Right, the government is the very paragon of efficiency, speed, and accountability.
We will change the way we pay for health care – not by procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results.Incentives to doctors and hospitals to prevent injuries? Um...does not compute. What kind of incentives is he talking about?
And we will slow the growth of Medicare costs by strengthening an independent commission of doctors, nurses, medical experts and consumers who will look at all the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services seniors need.Sweet, another commission. Are they going to work for free? Does anyone ever even listen to anything any of the commissions say? The Government Accountability Office has done a ton of great studies on ways we can cut spending, but no one ever talks about any of their suggestions.
Then he touches on Social Security:
As I said in the State of the Union, both parties should work together now to strengthen Social Security for future generations. But we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans’ guaranteed retirement income to the whims of the stock market.So, nothing is changing for current retirees, the disabled, or the "vulnerable." Benefits for future generations won't be slashed. And no privatization. So what exactly is his plan to strengthen Social Security? He doesn't tell us, instead he just moves on to step 4, my favorite:
The fourth step in our approach is to reduce spending in the tax code. In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans. But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. And I refuse to renew them again.Here's where the real class warfare enters the speech. The "wealthiest Americans" here start at those making $200,000 a year -- not just a bunch of millionaires and billionaires. I also love it that the government cannot "afford" to let people keep the money they earn.
Beyond that, the tax code is also loaded up with spending on things like itemized deductions. And while I agree with the goals of many of these deductions, like homeownership or charitable giving, we cannot ignore the fact that they provide millionaires an average tax break of $75,000 while doing nothing for the typical middleclass family that doesn’t itemize.Itemizing isn't hard. You can do it yourself with Turbo Tax and it takes no time at all. And if a millionaire is getting a tax break of $75,000, he's probably paying upwards of $300,000. No one ever says that -- the impression left by the media and these kinds of speeches is that the rich pay nothing in taxes. We all know that's not true at all. I would also suspect that your typical middleclass family is certainly claiming the mortgate interest deduction if they own a home, and also claiming for their trashbags full of junk they drag over to the Salvation Army.
My budget calls for limiting itemized deductions for the wealthiest 2% of Americans – a reform that would reduce the deficit by $320 billion over ten years.Awesome. The only real deductions I get -- mortage interest and charity -- are going to be limited. Let's watch charitable contributions drop if he succeeds in putting this into place. I also sense there will be a huge public uproar if he tries to cut the mortage interest deduction, although it may be slightly less if he only targets the top 2%. Who cares about them, right?
But to reduce the deficit, I believe we should go further. That’s why I’m calling on Congress to reform our individual tax code so that it is fair and simple – so that the amount of taxes you pay isn’t determined by what kind of accountant you can afford. I believe reform should protect the middle class, promote economic growth, and build on the Fiscal Commission’s model of reducing tax expenditures so that there is enough savings to both lower rates and lower the deficit. And as I called for in the State of the Union, we should reform our corporate tax code as well, to make our businesses and our economy more competitive.I can get on board with most of this. Taxes should be easier. Hey, how about a flat tax for everyone?
So, that's about it. Doesn't it seem vague? Other than the defense and the increased revenue from higher taxes for the wealthy, I don't see where any real "sacrifices" are being made. But, maybe I'm just crazy.