USA Today: Obama will now seek $2 trillion deficit reduction plan composed mostly of spending cuts

[Cali_Democrat]

Looking for debt deal, Obama outlines cuts
By Richard Wolf and David Jackson, USA TODAY

WASHINGTON — President Obama implored congressional leaders Thursday to reach a deal on raising the nation's $14.3 trillion borrowing limit by this weekend to reassure jittery world financial markets, and he suggested he could settle for a smaller deficit-reduction package than he originally sought.

Rather than continue to push for $4 trillion in savings over the next decade, Obama outlined a plan that would achieve roughly $2 trillion, almost entirely from spending reductions. That marks a major concession — one the president is likely to address at a news conference scheduled for 11 a.m. ET this morning.

...

Obama also is seeking to extend a payroll tax cut enacted last December for another year and possibly extend it to small businesses. For that reason, Republicans could claim that the package is revenue-neutral rather than representing a tax increase — but at the meeting, Republicans still refused to go along.

The remainder of the package would be spending cuts and savings on interest, but not the major reductions in Medicare or Social Security that Obama had been willing to accept as part of a $4 trillion deal.

Read more...http://www.usatoday.com/news/washington/2011-07-14-obama-debt-ceiling_n.htm

Well this is interesting.

[brooklynite]

1. But I was TOLD there would be slashing...

...of entitlements. Slashing with glee! Right here! Why would Republicans not want to go ahead with the slashing?

Unless of course, the slashing was never part of the President's strategy.....

[Cali_Democrat]

8. According to the article....

If Obama went with the $4 trillion plan he originally wanted, there would be larger cuts to programs like SS and Medicare, but larger revenue enhancements that Republicans were against.

It looks like Republicans will be happy not getting the tax increases in the $4 trillion plan and Obama will be happy not having to cut SS, Medicare and other entitlements as much as previously thought.

Of course devil is in the details. What kind if cuts are we talking about and what kind of revenue enhancers are we talking about? The article says that the plan will mainly consist of cuts.

Obama's press conference tomorrow should be interesting to say the least.

[flpoljunkie]

21. I also read the spending cuts would be before 2012. Even Bernanke says not to cut spending now!

[flpoljunkie]

23. More from the CBO via Politico on the effect of $2 trillion in cuts...

Almost as a footnote to the political maneuvering, the Congressional Budget Office released a little noticed analysis of what would be the impact of $2 trillion in deficit reduction over 10 years.

The findings show that that $2 trillion investment could ultimately yield a dividend of another $600 billion in savings over the decade — largely because of the impact on interest charges. But the report also included an ominous note that the immediate impact on a weak economy would be a drop in output.

The CBO built in some protection by beginning the deficit reduction at $100 billion the first year and then growing to $300 billion at the end of the decade. But even with that stepped approach, it forecast a 0.4% drop in GNP in the first year which could be almost one-seventh reduction from the current projection of about 3% annual growth.

http://www.politico.com/news/stories/0711/59048_Page2.html

[JoePhilly]

25. I was PROMISED there would be SLASHING!!!!

Obama was "hell bent" on slashing social security.

I watched folks on DU throw apoplectic fits about it.

Some threads burst right into flames with anger over it!!

The gnashing of teeth, the rending of garments!!!

I got scared and started to dig a big hole in my backyard to protect myself from the bloody revolution that was about to commence!!!

Now, all I have is a hole in the yard.

[gateley]

2. That doesn't make any sense, he's already got them scrambling.

Why back off when you've got them on the ropes?

Guess we'll just have to wait until the presser to see if it's accurate or not (if he gives us the details).

[Cali_Democrat]

10. I agree

The Republicans were on the run.

[Tarheel_Dem]

3. So the "major concession" is that the Prez wanted 4 trillion in savings, but

has now agreed to 2? Is that really a concession? The article doesn't specify the "spending cuts", so I'm guessing you'll go with your usual speculation? Not sure what you find "interesting".

[Tx4obama]

4. Just another article with UNnamed sources. n/t

[Tarheel_Dem]

5. Gotta feed that 24 hour media beast, ya know?

;)

[flamingdem]

6. Cantor was after a smaller package, I wouldn't trust this news yet nt

[gateley]

7. I think that was what Biden, et al, were going for, too -- Not

really sure why Obama wanted the bigger deal. If that's what he wanted all along, why wasn't that what the Biden group was working on? This whole thing confuses me. Not that it matters if I get it or not.

[Tx4obama]

9. Maybe Obama just said he wanted the big one, so that ....

everyone would end up agreeing on the little in the end.

[flamingdem]

11. More details: Looking for debt deal, Obama outlines cuts

* saw this in Breaking News

Source: USA Today

In Obama's $2 trillion plan, tax increases would come from a 35% limit on itemized deductions and the elimination of special-interest tax breaks for oil and gas companies, corporate jet owners and producers of ethanol. If tax rates on upper-income people returned to 36% and 39.6% in 2013, as Obama wants, the limit on deductions would save about $120 billion.

Obama also is seeking to extend a payroll tax cut enacted last December for another year and possibly extend it to small businesses. For that reason, Republicans could claim that the package is revenue-neutral rather than representing a tax increase — but at the meeting, Republicans still refused to go along.

The remainder of the package would be spending cuts and savings on interest, but not the major reductions in Medicare or Social Security that Obama had been willing to accept as part of a $4 trillion deal.

[Tx4obama]

12. Here's a link to the LBN article - for those that want to read the whole thread

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4920852

[alcibiades_mystery]

13. It's actually an interesting offer, and puts the GOPers in a bad position

They insisted that any tax increases be "offset" with tax cuts. On its face, this of course makes no sense, since the tax increases are designed to raise revenue. But extending the payroll tax cut and extending it to small businesses forces the GOP to pick a side between tax cuts that might in theory be stimulative (to the extent that payroll tax cuts go directly into circulation) and hit middle income Americans, and tax cuts that seem only designed for corporations and the rich (oil and gas, line deduction limits, etc.). Obama also throws a proposal for small businesses into the mix to further pressure the GOP's rhetoric on that.

Don't get me wrong: I think the whole idea of a tax cut in this situation is wrong-headed, but I'm not sure there's any way around it other than demanding a clean bill and making the GOPers deny it, which is my preference here.

My guess is that they'll take this deal before the weekend, though, and everyone on all sides will grumble.

[Cali_Democrat]

14. That's pretty much how I see it as well, although I would stress...

the payroll tax cut, as proposed previously by the Obama Admin, is ONLY on the employer (business) side and not for the employee side. It's essentially a tax cut for businesses.

[golfguru]

17. Very good point! n/t

[FrenchieCat]

18. It would extend the employee side of the cut, and provide employers

the same benefit, something they hadn't had to date. Small businesses would be the most impacted by this payroll tax cut, and as a Small Business accountant, I can tell you that making payroll for these small companies does affect their hiring decisions (including the fact that they have to pay their payroll taxes to payroll companies 2 days ahead of the actual payroll date....and so the savings do add up, and it would indeed make a difference in hiring decisions....as payroll expense is looked (and whether to lay off or to hire) at very closely when sales are down. Certainly, big businesses would also benefit from such a cut, but I don't believe that Pres. Obama is making this offer simply for them.

[jefferson_dem]

20. Oh, some on both wings will grumble.

That's a guarantee.

[gateley]

16. Maybe -- but boy, if I'm reading this article correctly, it sounds

as though HE'S the one retreating! Am I just not getting it?

Going to bed now so I'm up and ready for the presser -- hope it's not just generalities. Ha! Like I could do ANYTHING about what they decide anyway! :eyes:

:hi:

[LiberalFighter]

24. Real negotiators shoot for the sky and hope enough lands in the right place.

[The_Casual_Observer]

15. Spending cuts that size will send the whole world into a depression

so deep that it might outlast all of us. They have all gone crazy.

[blueclown]

19. Obama's playing chess again!

That mastermind, that brilliant negotiator!

Nothing says "winning" a negotiation like not winning a negotiation and making a concession on your biggest issue you were fighting for, which was raising revenue. Instead, we'll get a mostly spending cut bill, which is exactly what we don't need in a recession.

[polichick]

22. self-delete