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Obama speech: His four-part plan to cut $4 trillion from federal deficits

Obama's plan to cut federal deficits over the next 12 years relies on tax increases for the wealthy as well as budget cuts. But he rejects Republican plans for reforming Medicare.

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Though top Republicans – including House Budget Committee Ryan and House Speaker John Boehner – say they will not consider tax increases, Obama has an opening: Senate Republicans on the fiscal commission who voted in favor of sending the commission’s proposals to Capitol Hill for consideration. The commission plan included $1 in tax increases for every $3 in spending cuts, the same ratio as Obama’s new deficit-reduction framework.

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Draws line on Medicare reform

Obama’s speech was perhaps most striking for its harsh treatment of Ryan’s budget proposal, which would end Medicare and Medicaid as entitlements, saving the government more than $1 trillion over 10 years.

“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,” Obama said. “I will not tell families with children who have disabilities that they have to fend for themselves.”

Ryan rejects the term “voucher” in descriptions of his plan, instead calling the aid “premium support” for the purposes of purchasing private insurance. Lower-income seniors would get more support than wealthier ones, as would seniors who become ill or have chronic health conditions. Ryan’s plan would turn Medicaid, government-run health insurance for the poor and disabled, into federal block grants, which are given to each state in a finite sum.

But in an olive branch to Ryan and the Republicans, Obama added a few lines to his prepared marks that suggested he believes they have the best interests of the country at heart.

“Even those Republicans I disagree with most strongly, I believe are sincere about wanting to do right by their country,” Obama said. “We may disagree on our visions, but I truly believe they want to do the right thing.”

Republican response

Republicans did not hesitate to strike back at Obama after the speech, particularly on the tax issue.

“More promises, hollow targets, and Washington commissions simply won’t get the job done,” said Speaker Boehner in a statement. “To reduce the economic uncertainty hanging over American job creators we must demonstrate that we’re willing to take action. And any plan that starts with job-destroying tax hikes is a nonstarter.”

Former Massachusetts Gov. Mitt Romney, who has just launched an exploratory committee to run for president, also lashed out: “President Obama’s proposals are too little, too late. Instead of supporting spending cuts that lead to real deficit reduction and true reform of Medicare, Medicaid, and Social Security, the president dug deep into his liberal playbook for ‘solutions’ highlighted by higher taxes.”

RELATED: Deficit commission – four points of agreement and four reasons it could fail

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