April 17, 2011 The dueling deficit-cutting plans presented by congressional Republicans and President Obama both promise to restore the nation’s fiscal credibility. But if they fail to deliver, the result could be still higher deficits and the potential for another devastating economic crisis.
Even if the far-reaching and painful measures like those in the two proposals were adopted, economists say, more drastic action would be required in the years ahead to bring the deficit down to a sustainable level.
The GOP plan, drafted by Rep. Paul D. Ryan of Wisconsin, would reduce government red ink by $4.4 trillion over 10 years. It would cut federal spending by $5.8 trillion, but would offset that by $4.2 trillion in tax cuts. Ryan counts on the tax cuts to stimulate the economy and end up delivering substantially more tax revenues.
Obama would shrink deficits by $4 trillion over 12 years. He would make considerably smaller spending reductions, a total of $2 trillion, but would increase taxes by about $1 trillion, focusing on wealthy Americans. Since his definition of wealthy begins with families earning $250,000 a year, many working couples with hefty salaries but few if any tax shelters could feel the effects of his plan more sharply than the millionaires and billionaires he often talks about.
Obama’s savings rely in good part on future efforts by government regulators to hold down the costs of medical care — a major, but yet untested, element in the healthcare law that does not take full effect until 2014.
Both the Ryan-Republican plan and the one outlined by Obama in his speech last week are opening bids in what’s expected to be a drawn-out battle along partisan lines. But the two approaches agree on one thing: Over time, the nation’s mounting debt threatens the economic stability of the whole country, and the government — along with most voters — will almost certainly have to find ways to do more with less.
Stakes huge in partisan duel over U.S. deficit
