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Obama unveils economic plan: 5 ways it differs from Romney's (+video)

The little blue 'new economic patriotism' booklet is President Obama's answer to Mitt Romney's 5-point plan – and to voters who want to know what he would do with a second term.

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Romney says Obama pumps more money into the US education system without doing enough to promote needed reforms. Obama, for his part, has suggested that Romney would undercut needed education funding.

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Romney's "skills to succeed" agenda includes greater transparency about school performance and making Title I and IDEA funds portable, to enable low-income and disabled students attend schools of their choice. He would offer incentives to states to enhance school choice for parents. He says he'd attract "great teachers" using block grants, and by paring back on certification rules.

Deficit reduction

The president says his plan calls for deficit reduction of $4 trillion, compared with a baseline of continuing current tax and spending policies over a 10-year budget window. Obama calls it "balanced" deficit reduction that cuts "spending we can’t afford" while asking well-off households to pay a little more in taxes.

His plan, as scored by the Congressional Budget Office, is forecast to hold public debt relatively stable, at 76 percent of gross domestic product in 2022. Federal deficits are forecast to fall by mid-decade, but then start edging up, reaching 3 percent of GDP in 2022.

"The plan makes sure millionaires aren’t paying lower tax rates than many middle-class families," he says. Obama says ending wars in Iraq and Afghanistan represents money "saved," that can be used for a mix of deficit reduction and "putting Americans back to work rebuilding roads, bridges, runways, and schools here in the United States."

Romney supporters say that Obama is more of a tax hiker than a spending cutter. (Some $1.9 trillion in his deficit reduction plan comes on the tax-revenue side, and large additional chunks come from a related decline in interest payments, and from ending the wars.)

Romney calls for a sharp slowdown in federal spending, to 20 percent of GDP. Federal spending under Obama's plan over the next decade would be in the range of 22 to 23 percent of GDP.

Romney says his spending restraint can be achieved through steps such as downsizing the federal workforce through attrition, block granting programs to states, and cutting non-security discretionary spending by 5 percent. Just as Republicans question Obama's fiscal plan, skeptics wonder whether Romney will really achieve his desired spending cuts, and whether Romney tax reform will bring in his expected revenue.

Romney has called for a 20 percent cut in income-tax rates, but hasn't spelled out what deductions and loopholes he will close to fulfill a pledge that the changes result in no loss of revenue for the government.

On this point, Obama's booklet makes a controversial claim. It cites the bipartisan Tax Policy Center to claim that Romney's tax plan "raises taxes by more than $2,000 on middle class families with kids." But that isn't something the Tax Policy Center actually said. The center has argued that Romney's plan is math-challenged (and illustrated this point with an example that involved middle-class tax hikes). The center has been explicit that it did not intend to imply that Romney's plan is to raise middle-class taxes.

Obama's newly compiled plan covers two other points: health care and retirement security. But these amount to mainly an affirmation that his 2010 health-insurance reform law is working, and that he will protect traditional Medicare rather than experiment with a voucher-style alternative. 

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