On April 13, in prepared remarks titled “The Country We Believe In,” President Obama spoke about the cause of the current fiscal situation and the severity of the nation's debt, addressed the recently proposed Republic budget, and laid out his alternative approach to reducing the deficit by $4 trillion over 12 years.
Early in his remarks, Obama brought up raising taxes on the wealthy, noting that “those who have benefitted most from our way of life can afford to give a bit more back.” He referenced the 2010 Tax Relief Act's extension of tax cuts to the wealthy (currently in effect through 2012), stating that it was the only way that he could avoid raising taxes on the middle class, but explicitly said that he would not renew tax cuts to the wealthy again.
Obama then outlined current spending and said that many proposals focus simply on a relatively small portion of the budget that includes programs such as education, research, and transportation. He said, however, that “any serious plan to tackle our deficit will require us to put everything on the table.” The President took issue with the Republican budget, then described an alternative 4-part plan to reduce the deficit:
... keep domestic spending low;
... find additional savings in the defense budget;
... further reduce health care spending; and
... reduce spending in the Code—i.e., reduce tax expenditures.
With regard to the tax expenditures, Obama proposed reforming the Code with an eye toward protecting the middle class and reducing expenditures so as to allow lower tax rates while still achieving deficit reduction. As an example, he said that itemized deductions tend to benefit the wealthiest Americans, and he proposed limiting them for the wealthiest 2%. He also stated that corporate taxes should also be reformed.
Obama's plan also included a “debt failsafe”—that if certain targets aren't met by 2014, then such amounts will have to be made up by further spending cuts and more spending reductions in the Code. Obama said that Vice President Biden will begin holding regular meetings with Democratic and Republican leaders in May and hopefully reach a final agreement on a plan to reduce the deficit by the end of June.