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President
Barack Obama’s Budget Message
The Country We
Believe in
Wednesday 13 April 2011
The George Washington University
Washington, DC April 13, 2011
Truthout link and video
below...
Good afternoon. It’s great to be back at GW. I want you to know that
one of the reasons I kept the government open was so I could be here
today with all of you. I wanted to make sure you had one more excuse to
skip class. You’re welcome.
Of course, what we’ve been debating here in Washington for the last few
weeks will affect your lives in ways that are potentially profound.
This debate over budgets and deficits is about more than just numbers
on a page, more than just cutting and spending. It’s about the kind of
future we want. It’s about the kind of country we believe in. And
that’s what I want to talk about today.
From our first days as a nation, we have put our faith in free markets
and free enterprise as the engine of America’s wealth and prosperity.
More than citizens of any other country, we are rugged individualists,
a self-reliant people with a healthy skepticism of too much government.
But there has always been another thread running throughout our history
– a belief that we are all connected; and that there are some things we
can only do together, as a nation. We believe, in the words of our
first Republican president, Abraham Lincoln, that through government,
we should do together what we cannot do as well for ourselves. And so
we’ve built a strong military to keep us secure, and public schools and
universities to educate our citizens. We’ve laid down railroads and
highways to facilitate travel and commerce. We’ve supported the work of
scientists and researchers whose discoveries have saved lives,
unleashed repeated technological revolutions, and led to countless new
jobs and entire industries. Each of us has benefitted from these
investments, and we are a more prosperous country as a result.
Part of this American belief that we are all connected also expresses
itself in a conviction that each one of us deserves some basic measure
of security. We recognize that no matter how responsibly we live our
lives, hard times or bad luck, a crippling illness or a layoff, may
strike any one of us. “There but for the grace of God go I,” we say to
ourselves, and so we contribute to programs like Medicare and Social
Security, which guarantee us health care and a measure of basic income
after a lifetime of hard work; unemployment insurance, which protects
us against unexpected job loss; and Medicaid, which provides care for
millions of seniors in nursing homes, poor children, and those with
disabilities. We are a better country because of these commitments.
I’ll go further – we would not be a great country without those
commitments.
For much of the last century, our nation found a way to afford these
investments and priorities with the taxes paid by its citizens. As a
country that values fairness, wealthier individuals have traditionally
born a greater share of this burden than the middle class or those less
fortunate. This is not because we begrudge those who’ve done well – we
rightly celebrate their success. Rather, it is a basic reflection of
our belief that those who have benefitted most from our way of life can
afford to give a bit more back. Moreover, this belief has not hindered
the success of those at the top of the income scale, who continue to do
better and better with each passing year.
Now, at certain times – particularly during periods of war or recession
– our nation has had to borrow money to pay for some of our priorities.
And as most families understand, a little credit card debt isn’t going
to hurt if it’s temporary.
But as far back as the 1980s, America started amassing debt at more
alarming levels, and our leaders began to realize that a larger
challenge was on the horizon. They knew that eventually, the Baby Boom
generation would retire, which meant a much bigger portion of our
citizens would be relying on programs like Medicare, Social Security,
and possibly Medicaid. Like parents with young children who know they
have to start saving for the college years, America had to start
borrowing less and saving more to prepare for the retirement of an
entire generation.
To meet this challenge, our leaders came together three times during
the 1990s to reduce our nation’s deficit. They forged historic
agreements that required tough decisions made by the first President
Bush and President Clinton; by Democratic Congresses and a Republican
Congress. All three agreements asked for shared responsibility and
shared sacrifice, but they largely protected the middle class, our
commitments to seniors, and key investments in our future.
As a result of these bipartisan efforts, America’s finances were in
great shape by the year 2000. We went from deficit to surplus. America
was actually on track to becoming completely debt-free, and we were
prepared for the retirement of the Baby Boomers.
But after Democrats and Republicans committed to fiscal discipline
during the 1990s, we lost our way in the decade that followed. We
increased spending dramatically for two wars and an expensive
prescription drug program – but we didn’t pay for any of this new
spending. Instead, we made the problem worse with trillions of dollars
in unpaid-for tax cuts – tax cuts that went to every millionaire and
billionaire in the country; tax cuts that will force us to borrow an
average of $500 billion every year over the next decade.
To give you an idea of how much damage this caused to our national
checkbook, consider this: in the last decade, if we had simply found a
way to pay for the tax cuts and the prescription drug benefit, our
deficit would currently be at low historical levels in the coming years.
Of course, that’s not what happened. And so, by the time I took office,
we once again found ourselves deeply in debt and unprepared for a Baby
Boom retirement that is now starting to take place. When I took office,
our projected deficit was more than $1 trillion. On top of that, we
faced a terrible financial crisis and a recession that, like most
recessions, led us to temporarily borrow even more. In this case, we
took a series of emergency steps that saved millions of jobs, kept
credit flowing, and provided working families extra money in their
pockets. It was the right thing to do, but these steps were expensive,
and added to our deficits in the short term.
So that’s how our fiscal challenge was created. This is how we got
here. And 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. 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.
Now, before I get into how we can achieve this goal, some of you might
be wondering, “Why is this so important? Why does this matter to me?”
Here’s why. Even after our economy recovers, our government will still
be on track to spend more money than it takes in throughout this decade
and beyond. That means we’ll have to keep borrowing more from countries
like China. And that means more of your tax dollars will go toward
paying off the interest on all the loans we keep taking out. By the end
of this decade, the interest we owe on our debt could rise to nearly $1
trillion. Just the interest payments.
Then, as the Baby Boomers start to retire and health care costs
continue to rise, the situation will get even worse. By 2025, the
amount of taxes we currently pay will only be enough to finance our
health care programs, Social Security, and the interest we owe on our
debt. That’s it. Every other national priority – education,
transportation, even national security – will have to be paid for with
borrowed money.
Ultimately, all this rising debt will cost us jobs and damage our
economy. It will prevent us from making the investments we need to win
the future. We won’t be able to afford good schools, new research, or
the repair of roads and bridges – all the things that will create new
jobs and businesses here in America. Businesses will be less likely to
invest and open up shop in a country that seems unwilling or unable to
balance its books. And if our creditors start worrying that we may be
unable to pay back our debts, it could drive up interest rates for
everyone who borrows money – making it harder for businesses to expand
and hire, or families to take out a mortgage.
The good news is, this doesn’t have to be our future. This doesn’t have
to be the country we leave to our children. We can solve this problem.
We came together as Democrats and Republicans to meet this challenge
before, and we can do it again.
But that starts by being honest about what’s causing our deficit. You
see, most Americans tend to dislike government spending in the
abstract, but they like the stuff it buys. Most of us, regardless of
party affiliation, believe that we should have a strong military and a
strong defense. Most Americans believe we should invest in education
and medical research. Most Americans think we should protect
commitments like Social Security and Medicare. And without even looking
at a poll, my finely honed political skills tell me that almost no one
believes they should be paying higher taxes.
Because all this spending is popular with both Republicans and
Democrats alike, and because nobody wants to pay higher taxes,
politicians are often eager to feed the impression that solving the
problem is just a matter of eliminating waste and abuse –that tackling
the deficit issue won’t require tough choices. Or they suggest that we
can somehow close our entire deficit by eliminating things like foreign
aid, even though foreign aid makes up about 1% of our entire budget.
So here’s the truth. Around two-thirds of our budget is spent on
Medicare, Medicaid, Social Security, and national security. Programs
like unemployment insurance, student loans, veterans’ benefits, and tax
credits for working families take up another 20%. What’s left, after
interest on the debt, is just 12 percent for everything else. That’s 12
percent for all of our other national priorities like education and
clean energy; medical research and transportation; food safety and
keeping our air and water clean.
Up until now, the cuts proposed by a lot of folks in Washington have
focused almost exclusively on that 12%. But cuts to that 12% alone
won’t solve the problem. So any serious plan to tackle our deficit will
require us to put everything on the table, and take on excess spending
wherever it exists in the budget. A serious plan doesn’t require us to
balance our budget overnight – in fact, economists think that with the
economy just starting to grow again, we will need a phased-in approach
– but it does require tough decisions and support from leaders in both
parties. And above all, it will require us to choose a vision of the
America we want to see five and ten and twenty years down the road.
One vision has been championed by Republicans in the House of
Representatives and embraced by several of their party’s presidential
candidates. It’s a plan that aims to reduce our deficit by $4 trillion
over the next ten years, and one that addresses the challenge of
Medicare and Medicaid in the years after that.
Those are both worthy goals for us to achieve. But the way this plan
achieves those goals would lead to a fundamentally different America
than the one we’ve known throughout most of our history.
A 70% cut to clean energy. A 25% cut in education. A 30% cut in
transportation. Cuts in college Pell Grants that will grow to more than
$1,000 per year. That’s what they’re proposing. These aren’t the kind
of cuts you make when you’re trying to get rid of some waste or find
extra savings in the budget. These aren’t the kind of cuts that
Republicans and Democrats on the Fiscal Commission proposed. These are
the kind of cuts that tell us we can’t afford the America we believe
in. And they paint a vision of our future that’s deeply pessimistic.
It’s a vision that says if our roads crumble and our bridges collapse,
we can’t afford to fix them. If there are bright young Americans who
have the drive and the will but not the money to go to college, we
can’t afford to send them. Go to China and you’ll see businesses
opening research labs and solar facilities. South Korean children are
outpacing our kids in math and science. Brazil is investing billions in
new infrastructure and can run half their cars not on high-priced
gasoline, but biofuels. And yet, we are presented with a vision that
says the United States of America – the greatest nation on Earth –
can’t afford any of this.
It’s a vision that says America can’t afford to keep the promise we’ve
made to care for our seniors. It says that ten years from now, if
you’re a 65 year old who’s eligible for Medicare, you should have to
pay nearly $6,400 more than you would today. It says instead of
guaranteed health care, you will get a voucher. And if that voucher
isn’t worth enough to buy insurance, tough luck – you’re on your own.
Put simply, it ends Medicare as we know it.
This is a vision that says up to 50 million Americans have to lose
their health insurance in order for us to reduce the deficit. And who
are those 50 million Americans? Many are someone’s grandparents who
wouldn’t be able afford nursing home care without Medicaid. Many are
poor children. Some are middle-class families who have children with
autism or Down’s syndrome. Some are kids with disabilities so severe
that they require 24-hour care. These are the Americans we’d be telling
to fend for themselves.
Worst of all, this is a vision that says even though America can’t
afford to invest in education or clean energy; even though we can’t
afford to care for seniors and poor children, we can somehow afford
more than $1 trillion in new tax breaks for the wealthy. Think about
it. In the last decade, the average income of the bottom 90% of all
working Americans actually declined. The top 1% saw their income rise
by an average of more than a quarter of a million dollars each. And
that’s who needs to pay less taxes? They want to give people like me a
two hundred thousand dollar tax cut that’s paid for by asking thirty
three seniors to each pay six thousand dollars more in health costs?
That’s not right, and it’s not going to happen as long as I’m President.
The fact is, their vision is less about reducing the deficit than it is
about changing the basic social compact in America. As Ronald Reagan’s
own budget director said, there’s nothing “serious” or “courageous”
about this plan. There’s nothing serious about a plan that claims to
reduce the deficit by spending a trillion dollars on tax cuts for
millionaires and billionaires. There’s nothing courageous about asking
for sacrifice from those who can least afford it and don’t have any
clout on Capitol Hill. And this is not a vision of the America I know.
The America I know is generous and compassionate; a land of opportunity
and optimism. We take responsibility for ourselves and each other; for
the country we want and the future we share. We are the nation that
built a railroad across a continent and brought light to communities
shrouded in darkness. We sent a generation to college on the GI bill
and saved millions of seniors from poverty with Social Security and
Medicare. We have led the world in scientific research and
technological breakthroughs that have transformed millions of lives.
This is who we are. This is the America I know. We don’t have to choose
between a future of spiraling debt and one where we forfeit investments
in our people and our country. To meet our fiscal challenge, we will
need to make reforms. We will all need to make sacrifices. But we do
not have to sacrifice the America we believe in. And as long as I’m
President, we won’t.
Today, I’m proposing a more balanced approach to achieve $4 trillion in
deficit reduction over twelve years. It’s an approach that borrows from
the recommendations of the bipartisan Fiscal Commission I appointed
last year, and builds on the roughly $1 trillion in deficit reduction I
already proposed in my 2012 budget. It’s an approach that puts every
kind of spending on the table, but one that protects the middle-class,
our promise to seniors, and our investments in the future.
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. 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.
The second step in our approach is to find additional savings in our
defense budget. As Commander-in-Chief, I have no greater responsibility
than protecting our national security, and I will never accept cuts
that compromise our ability to defend our homeland or America’s
interests around the world. But as the Chairman of the Joint Chiefs,
Admiral Mullen, has said, the greatest long-term threat to America’s
national security is America’s debt.
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.
The third step in our approach is to further reduce health care
spending in our budget. Here, the difference with the House Republican
plan could not be clearer: their plan lowers the government’s health
care bills by asking seniors and poor families to pay them instead. Our
approach lowers the government’s health care bills by reducing the cost
of health care itself.
Already, the reforms we passed in the health care law will reduce our
deficit by $1 trillion. My approach would build on these reforms. We
will reduce wasteful subsidies and erroneous payments. 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. 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.
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.
Now, we believe the reforms we’ve proposed to strengthen Medicare and
Medicaid will enable us to keep these commitments to our citizens while
saving us $500 billion by 2023, and an additional one trillion dollars
in the decade after that. And if we’re wrong, and Medicare costs rise
faster than we expect, this approach will give the independent
commission the authority to make additional savings by further
improving Medicare.
But let me be absolutely clear: I will preserve these health care
programs as a promise we make to each other in this society. 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. I will not tell families with children who have
disabilities that they have to fend for themselves. We will reform
these programs, but we will not abandon the fundamental commitment this
country has kept for generations.
That includes, by the way, our commitment to Social Security. While
Social Security is not the cause of our deficit, it faces real
long-term challenges in a country that is growing older. 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.
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.
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 middle-class family that
doesn’t itemize.
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. 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.
This is my approach to reduce the deficit by $4 trillion over the next
twelve years. It’s an approach that achieves about $2 trillion in
spending cuts across the budget. It will lower our interest payments on
the debt by $1 trillion. It calls for tax reform to cut about $1
trillion in spending from the tax code. And it achieves these goals
while protecting the middle class, our commitment to seniors, and our
investments in the future.
In the coming years, if the recovery speeds up and our economy grows
faster than our current projections, we can make even greater progress
than I have pledged here. But just to hold Washington – and me –
accountable and make sure that the debt burden continues to decline, my
plan includes a debt failsafe. If, by 2014, our debt is not projected
to fall as a share of the economy – or if Congress has failed to act –
my plan will require us to come together and make up the additional
savings with more spending cuts and more spending reductions in the tax
code. That should be an incentive for us to act boldly now, instead of
kicking our problems further down the road.
So this is our vision for America – a vision where we live within our
means while still investing in our future; where everyone makes
sacrifices but no one bears all the burden; where we provide a basic
measure of security for our citizens and rising opportunity for our
children.
Of course, there will be those who disagree with my approach. Some will
argue we shouldn’t even consider raising taxes, even if only on the
wealthiest Americans. It’s just an article of faith for them. I say
that at a time when the tax burden on the wealthy is at its lowest
level in half a century, the most fortunate among us can afford to pay
a little more. I don’t need another tax cut. Warren Buffett doesn’t
need another tax cut. Not if we have to pay for it by making seniors
pay more for Medicare. Or by cutting kids from Head Start. Or by taking
away college scholarships that I wouldn’t be here without. That some of
you wouldn’t be here without. And I believe that most wealthy Americans
would agree with me. They want to give back to the country that’s done
so much for them. Washington just hasn’t asked them to.
Others will say that we shouldn’t even talk about cutting spending
until the economy is fully recovered. I’m sympathetic to this view,
which is one of the reasons I supported the payroll tax cuts we passed
in December. It’s also why we have to use a scalpel and not a machete
to reduce the deficit – so that we can keep making the investments that
create jobs. But doing nothing on the deficit is just not an option.
Our debt has grown so large that we could do real damage to the economy
if we don’t begin a process now to get our fiscal house in order.
Finally, there are those who believe we shouldn’t make any reforms to
Medicare, Medicaid, or Social Security out of a fear that any talk of
change to these programs will usher in the sort of radical steps that
House Republicans have proposed. I understand these fears. But I
guarantee that if we don’t make any changes at all, we won’t be able to
keep our commitments to a retiring generation that will live longer and
face higher health care costs than those who came before.
Indeed, to those in my own party, I say that if we truly believe in a
progressive vision of our society, we have the obligation to prove that
we can afford our commitments. If we believe that government can make a
difference in people’s lives, we have the obligation to prove that it
works – by making government smarter, leaner and more effective.
Of course, there are those who will simply say that there’s no way we
can come together and agree on a solution to this challenge. They’ll
say the politics of this city are just too broken; that the choices are
just too hard; that the parties are just too far apart. And after a few
years in this job, I certainly have some sympathy for this view.
But I also know that we’ve come together and met big challenges before.
Ronald Reagan and Tip O’Neill came together to save Social Security for
future generations. The first President Bush and a Democratic Congress
came together to reduce the deficit. President Clinton and a Republican
Congress battled each other ferociously and still found a way to
balance the budget. In the last few months, both parties have come
together to pass historic tax relief and spending cuts. And I know
there are Republicans and Democrats in Congress who want to see a
balanced approach to deficit reduction.
I believe we can and must come together again. This morning, I met with
Democratic and Republican leaders in Congress to discuss the approach I
laid out today. And in early May, the Vice President will begin regular
meetings with leaders in both parties with the aim of reaching a final
agreement on a plan to reduce the deficit by the end of June.
I don’t expect the details in any final agreement to look exactly like
the approach I laid out today. I’m eager to hear other ideas from all
ends of the political spectrum. And though I’m sure the criticism of
what I’ve said here today will be fierce in some quarters, and my
critique of the House Republican approach has been strong, Americans
deserve and will demand that we all bridge our differences, and find
common ground.
This larger debate we’re having, about the size and role of government,
has been with us since our founding days. And during moments of great
challenge and change, like the one we’re living through now, the debate
gets sharper and more vigorous. That’s a good thing. As a country that
prizes both our individual freedom and our obligations to one another,
this is one of the most important debates we can have.
But no matter what we argue or where we stand, we’ve always held
certain beliefs as Americans. We believe that in order to preserve our
own freedoms and pursue our own happiness, we can’t just think about
ourselves. We have to think about the country that made those liberties
possible. We have to think about our fellow citizens with whom we share
a community. And we have to think about what’s required to preserve the
American Dream for future generations.
This sense of responsibility – to each other and to our country – this
isn’t a partisan feeling. It isn’t a Democratic or Republican idea.
It’s patriotism.
The other day I received a letter from a man in Florida. He started off
by telling me he didn’t vote for me and he hasn’t always agreed with
me. But even though he’s worried about our economy and the state of our
politics, he said, “I still believe. I believe in that great country
that my grandfather told me about. I believe that somewhere lost in
this quagmire of petty bickering on every news station, the ‘American
Dream’ is still alive…
We need to use our dollars here rebuilding, refurbishing and restoring
all that our ancestors struggled to create and maintain…We as a people
must do this together, no matter the color of the state one comes from
or the side of the aisle one might sit on.”
I still believe as well. And I know that if we can come together, and
uphold our responsibilities to one another and to this larger
enterprise that is America, we will keep the dream of our founding
alive in our time, and pass on to our children the country we believe
in. Thank you, God bless you, and may God bless the United States of
America.
Read it at Truthout
See the video at YouTube
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