“I’m laying out a set of specific proposals to finish what we started this summer--proposals that live up to the principles I’ve talked about from the beginning. It’s a plan that reduces our debt by more than $4 trillion, and achieves these savings in a way that is fair--by asking everybody to do their part so that no one has to bear too much of the burden on their own.
“All told, this plan cuts $2 in spending for every dollar in new revenues. In addition to the $1 trillion in spending that we’ve already cut from the budget, our plan makes additional spending cuts that need to happen if we’re to solve this problem. We reform agricultural subsidies--subsidies that a lot of times pay large farms for crops that they don't grow. We make modest adjustments to federal retirement programs. We reduce by tens of billions of dollars the tax money that goes to Fannie Mae and Freddie Mac. We also ask the largest financial firms--companies saved by tax dollars during the financial crisis--to repay the American people for every dime that we spent. And we save an additional $1 trillion as we end the wars in Iraq and Afghanistan.
“Finally, this plan includes structural reforms to reduce the cost of health care in programs like Medicare and Medicaid … We’ll work with governors to make Medicaid more efficient and more accountable. And we’ll change the way we pay for health care. Instead of just paying for procedures, providers will be paid more when they improve results—and such steps will save money and improve care.
“So this is how we can reduce spending: by scouring the budget for every dime of waste and inefficiency, by reforming government spending, and by making modest adjustments to Medicare and Medicaid. But all these reductions in spending, by themselves, will not solve our fiscal problems. We can’t just cut our way out of this hole. It’s going to take a balanced approach. If we’re going to make spending cuts—many of which we wouldn’t make if we weren’t facing such large budget deficits—then it’s only right that we ask everyone to pay their fair share.
“I am ready, I am eager, to work with Democrats and Republicans to reform the tax code to make it simpler, make it fairer, and make America more competitive. But any reform plan will have to raise revenue to help close our deficit. That has to be part of the formula. And any reform should follow another simple principle: middle-class families shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward. It’s hard to argue against that. Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. There is no justification for it.
“It comes down to this: we have to prioritize. Both parties agree that we need to reduce the deficit by the same amount—by $4 trillion. So what choices are we going to make to reach that goal? Either we ask the wealthiest Americans to pay their fair share in taxes, or we’re going to have to ask seniors to pay more for Medicare. We can’t afford to do both.
“Either we gut education and medical research, or we’ve got to reform the tax code so that the most profitable corporations have to give up tax loopholes that other companies don’t get. We can’t afford to do both.
“This is not class warfare. It’s math.”
Visit the White House blog for more information on the President’s Plan for Economic Growth and Deficit Reduction—and take a few minutes today to call your legislators and ask them to pass the American Jobs Act.