President Obama gave a speech at George Washington University not long ago that was supposed to outline his plan to reduce the deficit and save our economy.
I found a transcript of the speech, and have annotated it for your edification. This is a president who does not believe believe that Americans are self-reliant and can handle their own problems. He does believe that success or failure in life are simply a matter of dumb luck, and that if you've been lucky, you owe it to the government to give a lot more tax money to it. Don't believe me? Read the speech; my annotations are in red.
OBAMA: It is wonderful to be back at G.W. I want you to know that one of the reasons that I worked so hard with Democrats and Republicans to keep the government open was so that I could show up here today.
(LAUGHTER)
I want to make sure that all of you had one more excuse to skip class.
(LAUGHTER)
You're welcome.
(LAUGHTER)
I want to give a special thanks to Steven Knapp, the president of G.W. I just saw him. Where is he?
There he is, right here.
(APPLAUSE)
I want to -- we've got a lot of distinguished guests here. A couple of people I want to acknowledge.
First of all, my outstanding vice president, Joe Biden, is here.
(APPLAUSE)
Our secretary of the treasury, Tim Geithner, is in the house.
(APPLAUSE)
Jack Lew, the director of the Office of Management and Budget.
(APPLAUSE)
Gene Sperling, chair of the National Economic Council, is here.
(APPLAUSE)
Members of our bipartisan fiscal commission are here, including the two outstanding chairs -- Erskine Bowles and Alan Simpson are here.
(APPLAUSE)
And we have a number of members of Congress here today. I'm grateful for all of you taking the time to attend.
What we've been debating here in Washington over the last few weeks will affect the lives of the students here and families all across America in potentially profound ways.
This debate over budgets and deficits is about more than just numbers on a page, it's about more than just cutting and spending. It's about the kind of future that we want.
It's about the kind of country that we believe in. And that's what I want to spend some time talking about today.
From our first days as a nation, we have put our faith in free markets and free enterprise as the engine of America's wealth and prosperity.
Keep this statement in mind as you read, because he repeatedly says he does not believe in free markets and free enterprise.
And more than citizens of any other country, we are rugged individualists, a self-reliant people with a healthy skepticism of too much government.
Again, keep this in mind, because he says, again, repeatedly, that he does not believe we are a nation of self-reliant rugged individuals. He believes that your success or failure in life is purely a matter of luck.
But there has always been another thread running through our history: a belief that we're all connected and that there are some things we can only do together, as a nation.
We believe, in the words of the first Republican president, Abraham Lincoln, that through government, we should do together what we cannot do as well for ourselves.
Note the "as well" above. He doesn't think government should just do what individuals, groups, or businesses can't do at all; he's saying government should also do things that it can do better. And how do you find out whether government can do better? You start a little program, then when it doesn't do as well as the private sector, you claim that it just needs more funding. And more funding. And more funding. All government programs need more funding, in the liberals' eyes. Except for national defense, which always needs less. Eventually, your little government program has grown to monstrous size with monstrous consequences. The KKK could not have come up with a better plan to destroy the black family than our welfare system, which was somehow supposed to be better than private charity.
And so we've built a strong military to keep us secure, and public schools and universities to educate our citizens.
Is he saying public schools are better than private ones? Who knew? Why doesn't he send his daughters to public schools, then?
We've laid down railroads and highways to facilitate travel and commerce.
We've supported the work of scientists and researchers whose discoveries have saved lives, unleashed repeated technological revolutions, and led to countless new jobs and entire new industries.
"Countless" new jobs - another way of saying, "I have no idea how many jobs have been created by government spending."
Each of us has benefited from these investments, and we're a more prosperous country as a result.
Please note - whenever a politician uses the word "investment," he is lying. "Investment" means putting X dollars down in the hope that one will get X+Y dollars back, in Z time. As any first-year managerial accounting student can explain, you need all three of those numbers to calculate your return on investment. When a politician uses the word "investment" without those three numbers, he is simply trying to pick your pocket and give you a vague sense that you're going to be better off for his having done so.
Now, part of this American belief that we're all connected also expresses itself in a conviction that each one of us deserves some basic measure of security and dignity.
That is a lie. Nobody deserves anything they do not own. If everyone deserves security, then nobody should have to pay for it. McDonald's slogan used to be "You deserve a break today," the implication being that you have somehow done something to earn it - you worked hard, so you deserve a reward. Does anyone deserve security if he has deliberately spent his entire life being a leech on society?
The only security everyone is entitled to is the security described in the Preamble to the Constitution - the security of the common defense, justice, and so forth. The Preamble says nothing about housing, or food, or medical care, and doesn't even imply it. Because if everyone was entitled to food, shelter, and medical care, then nobody could be forced to pay for it. And if nobody is going to pay for it, you're not going to have it. Again, you only deserve what you earn.
We recognize that, no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff may strike any one of us. "There but for the grace of God go I," we say to ourselves.
This goes back to what I wrote earlier - Obama does not believe we are a nation of self-reliant, rugged individualists. Bad luck can happen to anyone - and eventually hits everyone. But some people are better-prepared to deal with it. Obama would have you believe it's just dumb luck. But if you've lived your life responsibly, you are far more likely to weather the storm than someone who has not. Homelessness is far less often a matter of bad luck than of disastrous career choices. If you drop out of school, get into drugs and alcohol, have children you can't support, and decide a life of crime is just the ticket, then you are far more likely to end up homeless than if you made none of those choices. If you buy a house that you can afford only if absolutely nothing bad ever happens to you and your family - no job loss, no illnesses, etc., - you are far more likely to lose that house than if you bought one you could actually afford - or didn't buy a house at all. And if you decide to have children whether you can afford to pay for health insurance or not, you will run into huge medical expenses at some point. That's not bad luck; that's simple stupidity.
But Obama paints the picture that terrible bolts from the blue can strike anyone, any time, and leave them helpless to deal with it.
And so we contribute to programs like Medicare and Social Security, which guarantee us health care and a measure of basic income after a lifetime of hard work; unemployment insurance, which protects us against unexpected job loss; and Medicaid, which provides care for millions of seniors in nursing homes, poor children, those with disabilities.
Social Security guarantees "a measure of basic income?" That is a lie. The benefit formula has been changed numerous times through the years, various types of benefits have been cut back, eliminated, or not indexed to inflation, and both the Social Security tax (FICA) rate and tax base have increased dramatically over the years. And even Obama admits the system will go broke if nothing is done (though this speech says nothing about how to fix it). Some guarantee.
We're a better country because of these commitments.
I'll go further: We would not be a great country without those commitments.
So until 1935, when the Social Security Act was signed, America was not a great country. Pardon me while I pick my jaw up off the floor.
And for much of the last century, our nation found a way to afford these investments and priorities with the taxes paid by its citizens. As a country that values fairness, wealthier individuals have traditionally borne a greater share of this burden than the middle class or those less fortunate; everybody pays, but the wealthier have borne a little more.
"...everybody pays, but the wealthier have borne a little more." This lie is a whopper.
For starts, everybody does not pay. Almost half of all households pay no federal income tax at all. That's right - throw a rock at a residence and the chances are 50-50 that nobody in it pays federal income tax.
And the wealthier have not "borne a little more." The wealthier have borne a lot more. The top 1% of earners pay about 40% of all individual federal income taxes; the top 5% pay 60%.
"The wealthier have borne a little more." That's like saying Japan makes a few more cars than Cuba.
This is not because we begrudge those who've done well. We rightly celebrate their success.
Instead, it's a basic reflection of our belief that those who benefited most from our way of life can afford to give back a little -- a little bit more.
Give back to whom? The only reasonable answer is, "to those who helped make me successful." Okay, my parents who raised me right and worked hard to give me a good home and get a good education; maybe my employer, who provides me with good working conditions and a useful job. But thinking about that second one - we agreed when I was hired what I would give him and what he would give me. I would give him the best work I could, and he would give me money. So really, there's no reason for me to "give back" anything to my employer, any more than there is any reason for him to “give back” anything to me. Maybe IBM and Bill Gates, who, as the fathers of the microcomputer revolution, made it possible for me to get that good job; if they (or someone else) hadn't invented the microprocessor and its operating system, the world would be a very different place today.
But Obama is suggesting that those of us who have been successful should give back to the government, by paying even more taxes, even though, as pointed out above, we already pay much more than those who have not been successful.
And note Obama says, "a little bit more." Remember that to Obama, "a little more" means "a stunning amount more." As in, the wealthy pay a little bit more in taxes than the poor. It's always "a little bit more" to the leftists - just a little bit more money for education and our kids will all graduate from MIT; just a little bit more in Social Security and Medicare taxes and the systems will be solvent forever. Liberals assure us all that The Promised Land is just over the horizon - except that like the real horizon, you never seem to get there.
Moreover, this belief hasn't hindered the success of those at the top of the income scale. They continue to do better and better with each passing year.
"... in spite of our best efforts..."
Now, at certain times -- particularly during war or recession -- our nation has had to borrow money to pay for some of our priorities. And as most families understand, a little credit card debt isn't going to hurt, if it's temporary.
But as far back as the 1980s, America started amassing debt at more alarming levels, and our leaders began to realize that a larger challenge was on the horizon.
Those leaders are called "conservatives." I defy you to name a single liberal who was sounding the alarm about the national debt in the 1980s.
They knew that eventually, the baby boom generation would retire, which meant a much bigger portion of our citizens would be relying on programs like Medicare, Social Security and possibly Medicaid.
Like parents with young children who know they have to start saving for the college years, America had to start borrowing less and saving more to prepare for the retirement of an entire generation.
To meet this challenge, our leaders came together three times during the 1990s to reduce our nation's deficit -- three times. They forged historic agreements that required tough decisions made by the first President Bush, then made by President Clinton, by Democratic Congresses and by a Republican Congress.
All three agreements asked for shared responsibility and shared sacrifice, but they largely protected the middle class, they largely protected our commitments to seniors, they protected our key investments in our future.
There's that word, "investments" again. Hold on to your wallet.
By "shared responsibility," Obama means, "among the 50% of the population that actually pay income taxes." Think about this: Obama is saying half the country has no responsibility for the costs of running the government. Half the country must work to provide all the government services for the other half.
This is what I mean when I say Obama does not believe we are a nation of self-reliant, rugged individualists. He believes half the population of the United States of America needs to be taken care of by the other half. Half the people in this country are so bad off, are so feckless, that they can not contribute a single dime to the cost of running the country. And it's not because they have made catastrophic career choices - dropping out of school, crime, drugs, single parenthood; it's just dumb luck. "There but for the grace of God..."
As a result of these bipartisan efforts, America's finances were in great shape by the year 2000. We went from deficit to surplus. America was actually on track to becoming completely debt-free, and we were prepared for the retirement of the baby boomers.
Nonsense. America's finances were in great shape because of the dot-com bubble. Things went to hell pretty quickly when it popped.
But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed. We increased spending dramatically for two wars and an expensive prescription drug program, but we didn't pay for any of this new spending.
Ah yes, the prescription drug program. Bush wanted a $400 billion program; Democrats howled that he wanted to kill your grandma, and upped the price to $500 billion.
And we didn't increase spending just for two wars (three now, or is Obama saying the Libya war is paid for?). We increased spending for everything under the sun - new items and old. People have already forgotten that the 2009 budget was $200 billion more than Pelosi/Reid's previous record, that the 2010 was another $500 billion above that, and the 2011 budget another $200 billion above that.
Instead we made the problem worse with trillions of dollars in unpaid-for tax cuts; tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.
To give you an idea of how much damage this caused to our nation's checkbook, consider this.
In the last decade, if we had simply found a way to pay for the tax cuts and the prescription drug benefit, our deficit would currently be at low historical levels in the coming years.
What Obama meant to say was, "In the last decade, if the increase in federal spending had simply continued at the rate it had been for the previous 35 years, our deficit would currently be at low historical levels in the coming years."
But that's not what happened. And so, by the time I took office, we once again found ourselves deeply in debt and unprepared for a baby boom retirement that is now starting to take place.
So have you bitch-slapped Nancy Pelosi and Harry Reid for jacking up the federal spending the moment they took over both houses of Congress?
When I took office, our projected deficit annually was more than $1 trillion. On top of that, we faced a terrible financial crisis and a recession that, like most recessions, led us to temporarily borrow even more.
By "temporarily," he means, "for at least another twelve years."
In this case, we took a series of emergency steps that saved millions of jobs, kept credit flowing, and provided working families extra money in their pocket. It was absolutely the right thing to do, but these steps were expensive and added to our deficits in the short term.
"Saved millions of jobs." He's been making that claim since almost the day he took office, yet has never offered a scintilla of proof other than some computer models, which, as we all know, can be designed to prove that 1 = 2.
So that's how our fiscal challenge was created. That's how we got here. And now that our economic recovery is gaining strength, Democrats and Republicans must come together and restore the fiscal responsibility that served us so well in the 1990s.
What, another dot-com boom?
We have to live within our means. We have to reduce our deficit. And we have to get back on a path that will allow us to pay down our debt.
You're right. I eagerly await the specifics of your plan to do this.
And we have to do it in a way that protects the recovery, protects the investments we need to grow, creates jobs, and helps us win the future.
I know by "investments," he means, "money we're going to take from you because trust us, you'll thank us for it later.” I don't know what the hell he means by "win the future." I submit that he doesn't know either.
Now, before I get into how we can achieve this goal, some of you, particularly the younger people here -- you don't qualify, Joe...
(LAUGHTER)
(Someone nudge Joe, tell him he needs to wake up...)
... some of you might be wondering, "Why is this so important? Why does this matter to me?"
Well, here's why.
Even after our economy recovers, our government will still be on track to spend more money than it takes in throughout this decade and beyond. That means we'll have to keep borrowing more from countries like China.
That means more of your tax dollars each year will go towards paying off the interest on all of the loans that we keep taking out. By the end of this decade, the interest that we owe on our debt could rise to nearly $1 trillion. Think about that. That's the interest, just the interest payments.
Then, as the baby boomers start to retire in greater numbers and health care costs continue to rise, the situation will get even worse.
By 2025, the amount of taxes we currently pay will only be enough to finance our health care programs, Medicare and Medicaid, Social Security, and the interest we owe on our debt. That's it. Every other national priority -- education, transportation, even our national security -- will have to be paid for with borrowed money.
Now, ultimately all this rising debt will cost us jobs and damage our economy. It will prevent us from making the investments we need to win the future.
We won't be able to afford good schools, new research, or the repair of roads; all the things that create new jobs and businesses here in America.
Good schools? What does the federal government have to do with building schools?
And what do you mean by "all the things that create new jobs and businesses here in America?" What does the government do that creates jobs? All it does is hire some people and tell the rest, "pay the salaries." Please point out to me the wealth that government creates.
Businesses will be less likely to invest and open shop in a country that seems unwilling or unable to balance its books. And if our creditors start worrying that we may be unable to pay back our debts, that could drive up interest rates for everybody who borrows money, making it harder for businesses to expand and hire or families to take out a mortgage.
Here's the good news: That doesn't have to be our future; that doesn't have to be the country that we leave our children.
We can solve this problem. We came together as Democrats and Republicans to meet this challenge before; we can do it again. But that starts by being honest about what's causing our deficit.
You already told us: Bush's two wars and his Medicare drug plan. It's all Bush's fault.
You see, most Americans tend to dislike government spending in the abstract, but like the stuff that it buys.
Well, no. I like aircraft carriers and interstate highways. But I don't like buying dairy price supports and regulations that tell businesses every friggin' detail about how they must operate and how much water my toilet can flush and what kind of light bulbs I must use.
Most of us, regardless of party affiliation, believe that we should have a strong military and a strong defense. Most Americans believe we should invest in education and medical research. Most Americans think we should protect commitments like Social Security and Medicare.
And without even looking at a poll, my finely honed political instincts tell me that almost nobody believes they should be paying higher taxes.
(LAUGHTER)
So because all this spending is popular with both Republicans and Democrats alike, and because nobody wants to pay higher taxes, politicians are often eager to feed the impression that solving the problem is just a matter of eliminating waste and abuse.
Well, yeah. That was one of your big selling points when you were trying to get us all to buy Obamacare. Were you lying?
You'll hear that phrase a lot: "We just need to eliminate waste and abuse."
Only from you, lately.
The implication is that tackling the deficit issue won't require tough choices.
Or politicians suggest that we can somehow close our entire deficit by eliminating things like foreign aid, even though foreign aid makes up about 1 percent of our entire federal budget.
This is one of Obama's favorite rhetorical tricks. He invents a silly position, then tells us his opponents believe it. It's a common fallacy of argument known as the "straw man" because instead of attacking your opponent's real, strong argument, you invent a weak, silly one, tell everyone that's what your opponent believes, and attack the straw man argument.
No sane person believes eliminating foreign aid, or funding for NPR, or for Planned Parenthood, will balance the budget. But a lot of sane people are saying that when the Obama deficit is bigger than any of Bill Clinton's entire budgets, maybe we can't afford those things.
So here's the truth.
Around two-thirds of our budget -- two-thirds -- is spent on Medicare, Medicaid, Social Security and national security -- two- thirds.
So that's where the first and biggest cuts are going to be made, right?
Programs like unemployment insurance, student loans, veterans' benefits and tax credits for working families take up another 20 percent.
So those programs will be hit when Social Security, Medicare, Medicaid, and defense have been straightened out?
What's left, after interest on the debt, is just 12 percent for everything else. That's 12 percent for all of our national priorities: education, clean energy, medical research, transportation, our national parks, food safety, keeping our air and water clean. You name it, all of that accounts for 12 percent of our budget.
Now, up 'til now, the debate here in Washington -- the cuts proposed by a lot of folks in Washington have focused almost exclusively on that 12 percent.
But cuts to that 12 percent alone won't solve the problem. So any serious plan to tackle our deficit will require us to put everything on the table and take on excess spending wherever it exists in the budget.
"Everything" is going to be on the table. Sounds good!
A serious plan doesn't require us to balance our budget overnight. In fact, economists think that with the economy just starting to grow again we need a phased-in approach. But it does require tough decisions and support from our leaders in both parties now. Above all, it will require us to choose a vision of the America we want to see five years, 10 years, 20 years down the road.
Now, to their credit, one vision has been presented and championed by Republicans in the House of Representatives and embraced by several of their party's presidential candidates. It's a plan that aims to reduce our deficit by $4 trillion over the next 10 years, and one that addresses the challenge of Medicare and Medicaid in the years after that.
Those are both worthy goals. They're worthy goals for us to achieve.
But the way this plan achieves those goals would lead to a fundamentally different America than the one we've known, certainly in my lifetime. In fact, I think it would be fundamentally different than what we've known throughout our history.
Well, weren’t you the guy who said when he became president, he was going to “fundamentally change” America? So what’s your problem?
A 70 percent cut in clean energy, a 25 percent cut in education, a 30 percent cut in transportation, cuts in college Pell Grants that will grow to more than $1,000 per year.
That's the proposal.
These aren't the kind of cuts you make when you're trying to get rid of some waste or find extra savings in the budget. These aren't the kind of cuts that the fiscal commission proposed.
Wait. You're telling us that we have to make hard decisions, but we can't cut Pell Grants?
These are the kind of cuts that tell us we can't afford the America that I believe in and I think you believe in.
Sorry, pal, I don't believe in the same America you believe in. I believe in America that doesn't have half the population unable to pay a dime towards the cost of running the country. I believe in America where people can meet and defeat challenges, not run crying to the government to solve every little problem they have. I believe Americans are strong. You obviously believe we are weak.
I believe it paints a vision of our future that is deeply pessimistic. It's a vision that says if our roads crumble and our bridges collapse, we can't afford to fix them; if there are bright young Americans who have the drive and the will but not the money to go to college, we can't afford to send them.
Another straw man. Your opponents say government can't solve all our problems; you twist that into, "you want everything to fall apart."
Go to China and you'll see businesses opening research labs and solar facilities.
South Korean children are outpacing our kids in math and science. They're scrambling to figure out how they put more money into education.
South Korean children are outpacing our kids in math and science and they're doing it even though their parents spend only about half what we spend on our kids' education. So the problem with our education isn't money, is it?
Brazil is investing billions in new infrastructure and can run half their cars not on high-priced gasoline, but on biofuels.
And yet, we are presented with a vision that says the American people, the United States of America, the greatest nation on Earth, can't afford any of this.
Okay, why don't we start by cutting our education spending back to the level of South Korea?
It's a vision that says America can't afford to keep the promise we've made to care for our seniors. It says that 10 years from now, if you're a 65-year-old who's eligible for Medicare, you should have to pay nearly $6,400 more than you would today.
Straw man again. Ryan's proposal says we're going to change Medicare to make it work better, so it doesn't go bankrupt, and Obama says, "You want to kill grandma."
It says, instead of guaranteed health care, you will get a voucher. And if that voucher isn't worth enough to buy the insurance that's available in the open marketplace, well, tough luck; you're on your own.
This is both a straw man and a different kind of fallacy of argument - the false dichotomy. Obama presents two impossible choices - either you keep Medicare the way it is or you get some piece of paper. Except that piece of paper can be as much as $15,000, and $15,000 will buy very good health insurance.
This brings us back to what I said earlier - that Obama does not believe in capitalism or free enterprise. Capitalism constantly finds ways to provide goods and services that are both better and less expensive. When I was a kid, a car with an FM radio in it was rare; now it's almost impossible to buy one without an FM radio and a CD player. When I was a kid, air-conditioning was an extra-cost option; now it's ubiquitous. When I was a kid, nobody had even heard of automobile air bags; now econoboxes have six of them.
The same is true everywhere. What did a 48" HD TV cost five years ago? Two or three thousand bucks. Today, it's more like three or four hundred. Computers, cell phones - everything capitalism touches - are better and less expensive than they were just a few years ago.
And yes, even medical care. In 1944, Franklin Roosevelt had arteriosclerosis and high blood pressure, and all his doctors could do for the most powerful man in the world was tell him to rest as much as possible, cut down on the alcohol, and, for God's sake, stop smoking. Today, any clerk at your local DMV office with those medical problems would have had triple bypass surgery, cardiac stents, statin medications to control his cholesterol, and meds to control his blood pressure.
Put simply, it ends Medicare as we know it.
Medicare as we know it is going to end regardless because it's already gone over the cliff - it just hasn't hit the ground yet. It's just a question of what replaces it.
It's a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit.
Another straw man. Read Ryan's proposal; it will make health insurance available to everyone. The difference is that people will have a wide range of choices what insurance to buy, instead of the two choices you have today, which amount to a) take it, or b) leave it.
Who are these 50 million Americans?
Many are somebody's grandparents, maybe one of yours, who wouldn't be able afford nursing home care without Medicaid.
Many are poor children. Some are middle-class families who have children with autism or Down's syndrome. Some are these kids with disabilities are -- the disabilities are so severe that they require 24-hour care.
These are the Americans we'd be telling to fend for themselves.
Actually, you can afford nursing home care if you buy long-term care insurance when you're young - I get come-ons in the mail every day (I already have long-term care insurance, thank you very much). But that would require you to take some responsibility for your own well-being, and Obama doesn't believe in that America; he believes that half of all Americans can't take care of their most basic needs, so the rich need to pay "a little more."
And, worst of all, this is a vision that says even though Americans can't afford to invest in education at current levels or clean energy, even though we can't afford to maintain our commitment on Medicare and Medicaid, we can somehow afford more than $1 trillion in new tax breaks for the wealthy.
Really, you need to stop bringing up education if you don't want me to keep bringing up South Korea.
And what "new tax breaks" for the wealthy are we talking about here? The so-called Bush tax cuts have been around for ten years. That's not new. Repealing them would be a new tax hike.
Think about that.
In the last decade, the average income of the bottom 90 percent of all working Americans actually declined.
I doubt that very, very much. Show us the numbers.
Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. That's who needs to pay less taxes?
Another straw man. Who is saying that the rich should get additional tax cuts?
They want to give people like me a $200,000 tax cut that's paid for by asking 33 seniors to each pay $6,000 more in health costs.
Really? I've heard of no such legislation.
That's not right, and that's not going to happen as long as I'm president.
Big talk, since nobody's actually proposing such a thing. And I promise as long as I'm able to stand on my own two feet, no unicorns are going to eat your azaleas.
(APPLAUSE)
This vision is less about reducing the deficit than it is about changing the basic social compact in America. Ronald Reagan's own budget director said there's nothing serious or courageous about this plan.
Okay, just last December, you said Ryan's budget proposal was serious. So were you lying then or are you lying now?
But you are right; it does change the basic social compact. It demands that we take care of ourselves, that we recognize we can deal with our own problems, that we don't need the government to kiss the boo-boo every time we scrape our collective knee. It is not the purpose of government to provide you a house, or food, or medical care. The purpose of government is to protect life, liberty and property, to promote the national defense, establish justice, and ensure domestic tranquility. We're Americans; if the government will do those things, we'll be able to take care of the rest.
Or don't you believe that?
There's nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. And I don't think there's anything courageous about asking for sacrifice from those who can least afford it and don't have any clout on Capitol Hill. That's not a vision of the America I know.
Yes, we get it. The America you know is one where half the people can't pay a single dime for the cost of running the country, and demand that the other half do it for them.
The America I know is generous and compassionate. It's a land of opportunity and optimism. Yes, we take responsibility for ourselves, but we also take responsibility for each other, for the country we want and the future that we share.
We're a nation that built a railroad across a continent and brought light to communities shrouded in darkness. We sent a generation to college on the G.I. Bill and we saved millions of seniors from poverty with Social Security and Medicare.
Well, the railroads and electric light weren't gifts handed down by a beneficent government. They came from greedy capitalists, who were thanked by having the epithet "robber barons" attached to their names. That's the America Barack Obama loves - one where you get castigated for getting rich while bringing comfort and prosperity to us all.
We have led the world in scientific research and technological breakthroughs that have transformed millions of lives.
That's who we are. This is the America that I know.
We don't have to choose between a future of spiraling debt and one where we forfeit our investment in our people and our country.
Another straw man. Nobody is making that argument, and you know it.
To meet our fiscal challenge, we will need to make reforms, we will all need to make sacrifices. But we do not have to sacrifice the America we believe in. And as long as I'm president, we won't.
Well, this is encouraging. "...we will all have to make sacrifices." What sacrifices do you propose for the half of America that pays no income tax?
So today I'm proposing a more balanced approach to achieve $4 trillion in deficit reduction over 12 years.
Did you catch that? When did the magic number become twelve years? Congress is not permitted to make budget projections beyond ten years.
It's an approach that borrows from the recommendations of the bipartisan fiscal commission that I appointed last year, and it builds on the roughly $1 trillion in deficit reduction I already proposed in my 2012 budget.
Obama's 2012 budget proposal is for a budget only $100 billion less than the 2011 budget - a reduction of a little less than three percent.
It's an approach that puts every kind of spending on the table, but one that protects the middle class, our promise to seniors and our investments in the future.
Every kind of spending? Baloney. You went over the entire federal budget and all you could reduce it by over last year's record-busting budget was three percent? Even after you went after all that waste, fraud, and abuse?
The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week. That step alone will save us about $750 billion over 12 years.
"...keep annual domestic spending low..." This is where Obama completely parts ways with reality. In order to keep it low, it has to have been low in the first place. Does he really believe that?
We will make the tough cuts necessary to achieve these savings, including in programs that I deeply care about. But I will not sacrifice the core investments that we need to grow and create jobs. We will invest in medical research. We will invest in clean energy technology. We will invest in new roads and airports and broadband access. We will invest in education. We will invest in job training. We will do what we need to do to compete, and we will win the future.
Yeah, invest, invest, invest. Spend, spend, spend. Where are you going to cut, smart guy?
The second step in our approach is to find additional savings in our defense budget.
Ah, that answers the question I just asked. It's the first place liberals look to cut. As well as the last. Okay, it's the only place liberals look to cut. Ever.
Now, as commander in chief, I have no greater responsibility than protecting our national security, and I will never accept cuts that compromise our ability to defend our homeland or America's interests around the world.
But as the chairman of the Joint Chiefs, Admiral Mullen, has said, the greatest long-term threat to America's national security is America's debt.
So just as we must find more savings in domestic programs, we must do the same in defense. And we can do that while still keeping ourselves safe.
Wait, you haven’t said what domestic programs you would cut.
Over the last two years, Secretary Bob Gates has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again.
Okay, so if we save $400 billion in defense next year - which I bet we can't - that will knock the proposed deficit down from $1.6 trillion to $1.2 trillion. Where are you going to get that remaining $1.2 trillion? And then what are you going to do the following year? Cut defense by another $400 billion. Since the defense budget for this year is only about $750 billion, you can only cut $400 billion out of it so many times.
We need to not only eliminate waste and improve efficiency and effectiveness, but we're going to have to conduct a fundamental review of America's missions, capabilities, and our role in a changing world.
So a fundamental review of America's defense is in order, but not a fundamental review of what's really bankrupting the country - the social safety net.
I intend to work with Secretary Gates and the Joint Chiefs on this review, and I will make specific decisions about spending after it's complete.
The third step in our approach is to further reduce health care spending in our budget. Now, here the difference with the House Republican plan could not be clearer.
Their plan essentially lowers the government's health care bills by asking seniors and poor families to pay them instead. Our approach lowers the government's health care bills by reducing the cost of health care itself.
That's a couple of lies right there.
The Ryan plan doesn't give people a one-size-fits-all insurance policy. It gives them a menu of choices of insurance policies. And it provides vouchers to people who need them to help pay for the insurance. Medicare is going broke because it's one-size-fits-all. It assumes that everyone will both want and need the same health care coverage. What if I want a cheaper policy that only covers catastrophic expenses? Tough luck. One size fits all, and if that's inefficient, we can just raise taxes to cover the difference.
And government has never reduced the cost of anything.
Already, the reforms we passed in the health care law will reduce our deficit by $1 trillion.
Evidence?
My approach would build on those -- these reforms.
We will reduce wasteful subsidies and erroneous payments. We will cut spending on prescription drugs by using Medicare's purchasing power to drive greater efficiency and speed generic brands of medicine onto the market. We will work with governors of both parties to demand more efficiency and accountability from Medicaid.
Ah yes, we're going to eliminate waste, fraud, and abuse. Wait, you said that wouldn't be nearly enough.
We will change the way we pay for health care: not by the procedure or the number of days spent in a hospital, but with new incentives for doctors and hospitals to prevent injuries and improve results.
Such as?
And we will slow the growth of Medicare costs...
So Medicare costs will continue to rise even after you've implemented all these wondrous changes?
...by strengthening an independent commission of doctors, nurses, medical experts and consumers who will look at all the evidence and recommend the best ways to reduce unnecessary spending while protecting access to the services that seniors need.
So a bunch of people on a committee will keep Medicare costs under control by finding ways to do it that nobody else has figured out yet? Excuse me for not believing a word of this.
Now, we believe the reforms we've proposed to strengthen Medicare and Medicaid will enable us to keep these commitments to our citizens while saving us $500 billion by 2023, and an additional $1 trillion in the decade after that.
$500 billion in ten years. That's $50 billion a year, roughly. You might as well try to drain a bathtub a thimbleful at a time.
But if we're wrong, and Medicare costs rise faster than we expect, then this approach will give the independent commission the authority to make additional savings by further improving Medicare.
Huh? Why are you going to wait until things are completely falling apart to further improve Medicare? If you have ideas to improve it, why should they wait? Let's hear those ideas!
But let me be absolutely clear: I will preserve these health care programs as a promise we make to each other in this society. 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. I will not tell families with children who have disabilities that they have to fend for themselves.
I'd rather be at the mercy of an insurance company than at the mercy of the government. And who exactly is saying that families of children with disabilities will have to fend for themselves? That wouldn't be another straw man, would it? You have a whole barnful by now.
We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations.
That includes, by the way, our commitment to Social Security. While Social Security is not the cause of our deficit, it faces real long-term challenges in a country that's growing older.
Actually, Social Security is contributing to the deficit, starting this year. It's paying out more than it's taking in. It's making up the difference by cashing in U.S. government bonds that it holds. The money the government uses to redeem those bonds isn't available to pay for other things, like roads and aircraft carriers and NPR.
As I said in the State of the Union, both parties should work together now to strengthen Social Security for future generations. But we have to do it without putting at risk current retirees or the most vulnerable or people with disabilities, without slashing benefits for future generations and without subjecting Americans' guaranteed retirement income to the whims of the stock market. And it can be done.
Just subject America's "guaranteed" retirement income to the whims of Congress. I wish that someone would, just once, explain what the so-called "guarantee" is. When I buy a car or a DVD player, the guarantee is laid out in great detail. What is Social Security's guarantee? And what happens when there isn't enough money to pay that guarantee any more? In fact, Social Security benefits are not guaranteed legally because workers have no contractual or property rights to any benefits whatsoever. In two landmark cases, Flemming v. Nestor and Helvering v. Davis, the U.S. Supreme Court ruled that Social Security taxes are not contributions or savings, but simply taxes, and that Social Security benefits are simply a government spending program, no different than, say, farm price supports. Congress and the president may change, reduce, or even eliminate benefits at any time.
The fourth step in our approach is to reduce spending in the tax code, so-called tax expenditures.
This is, quite literally, gobbledygook. "Tax expenditures?"
In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans.
But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can't afford it. And I refuse to renew them again.
Okay, we heard you the first three times; you want to raise taxes on the rich.
Beyond that, the tax code is also loaded up with spending on things like itemized deductions. And while I agree with the goals of many of these deductions, from homeownership to charitable giving, we can't ignore the fact that they provide millionaires an average tax break of $75,000 but do nothing for the typical middle-class family that doesn't itemize.
News flash: the typical middle-class family does itemize, if they are buying a home. Or have we gotten to the point where if you own a home, you're rich?
So my budget calls for limiting itemized deductions for the wealthiest 2 percent of Americans, a reform that would reduce the deficit by $320 billion over 10 years.
Okay, so another "tax the rich" plan. Increase their tax rate taxes, and now, make them pay tax on more of their income just because not everyone gets as much of a deduction as they do.
But to reduce the deficit, I believe we should go further. And that's why I'm calling on Congress to reform our individual tax code so that it is fair and simple, so that the amount of taxes you pay isn't determined by what kind of accountant you can afford.
I believe reform should protect the middle class, promote economic growth, and build on the fiscal commission's model of reducing tax expenditures so that there is enough savings to both lower rates and lower the deficit. And as I called for in the State of the Union, we should reform our corporate tax code as well, to make our businesses and our economy more competitive.
You lost me at "reducing tax expenditures." This is a nonsense phrase; why should I believe anything in the sentence in which it is used?
So this is my approach to reduce the deficit by $4 trillion over the next 12 years.
To sum up:
1) Cut national defense.
2) Do something about Social Security, just don't change it.
3) Do something about Medicare, just don't change it.
4) Ignore Medicaid.
5) Increase taxes on the people who pay most of the taxes already.
6) Increase taxes on the people who pay most of the taxes already, again.
7) Share the sacrifice by making sure that the people who pay no income tax at all continue to pay no income tax at all.
It's an approach that achieves about $2 trillion in spending cuts across the budget. It will lower our interest payments on the debt by $1 trillion. It calls for tax reform to cut about $1 trillion in tax expenditures -- spending in the tax code. And it achieves these goals while protecting the middle class, protecting our commitment to seniors and protecting our investments in the future.
You keep saying "tax expenditures." I don't think that means what you think it means.
Now, in the coming years, if the recovery speeds up and our economy grows faster than our current projections, we can make even greater progress than I've pledged here.
And if I capture a unicorn in my back yard, I'll get rich charging admission. Both events are about as likely.
But just to hold Washington and to hold me accountable and make sure that the debt burden continues to decline, my plan includes a debt failsafe.
Politicians love these gimmicks. "Oh, if X happens, then Y will automatically kick in to save the day!" Remember "paygo?” Every dollar of new spending had to be matched by a dollar of new revenue or a dollar of spending cuts elsewhere. Couldn't miss. Except that congress simply redefined the word "new" whenever it was convenient, or exempted "emergency" appropriations, then proceeded to find an emergency at every turn.
If, by 2014, our debt is not projected to fall as a share of the economy, if we haven't hit our targets, if Congress has failed to act, then my plan will require us to come together and make up the additional savings with more spending cuts and more spending reductions in the tax code.
As near as I can interpret, from how he's used the term previously, "more spending reductions in the tax code" means "making the people who pay most of the taxes pay even more."
And that should be an incentive for us to act boldly now, instead of kicking our problems further down the road.
So this is our vision for America, this is my vision for America, a vision where we live within our means while still investing in our future, where everyone makes sacrifices but no one bears all the burden, where we provide a basic measure of security for our citizens and we provide rising opportunity for our children.
This is chock full of lies. The word "investing," for starts. The claim that everyone makes a sacrifice, when the truth is that only the Department of Defense and the people who pay most of the taxes will have to sacrifice.
There will be those who vigorously disagree with my approach. I can guarantee that as well.
(LAUGHTER)
Some will argue we should not even consider -- ever, ever -- raising taxes, even if only on the wealthiest Americans.
Another straw man. No sane person believes we should never, ever raise taxes, and nobody is suggesting that now. But here's an interesting fact. The individual income tax brought in 7.8% of GDP from 1952 to 1979 when the top tax rate ranged from 70% to 92%, 8% of GDP from 1993 to 1996 when the top tax rate was 39.6%, and 8.1% from 1988 to 1990 when the highest individual income tax rate was 28%. Raising tax rates does not increase revenue; improving the GDP is what does it. http://online.wsj.com/article/SB10001424052748704529204576257261171406994.html?mod=WSJ_hp_mostpop_read
It's just an article of faith to them.
Now we're simply demonizing the principled opposition. And we're supposed to believe you want to work together on our fiscal problems?
I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more.
Again, the claim that people are well-off just because they got lucky, and people who are poor were just born under a bad sign. This, in America, the land of opportunity. Shameful.
And again, the claim that we're just asking the people who pay most of the taxes to pay just a little more. We know by now what "a little more" means to liberals.
I don't need another tax cut. Warren Buffett doesn't need another tax cut. Not if we have to pay for it by making seniors pay more for Medicare or by cutting kids from Head Start or by taking away college scholarships that I wouldn't be here without, and that some of you wouldn't be here without.
Another false dichotomy. "You can't cut taxes without starving grandma, so which is it going to be?" Maybe you can't think of a way to do it; if so, then get out of the way and let someone else do it. Reagan managed to do it and we got the longest recovery ever. And again, who's suggesting cutting anyone’s taxes today? You lie every time you make that claim.
And here's the thing: I believe that most wealthy Americans would agree with me. They want to give back to their country, a country that's done so much for them. It's just Washington hasn't asked them to.
Washington doesn't ask for my money. It tells me to hand it over or go to prison, every April 15.
Others will say that we shouldn't even talk about cutting spending until the economy is fully recovered. These are mostly folks in my party.
Which is kinda like saying, "We're not going to stop bleeding you until you recover from your illness. More leeches, doctor Obama!"
I'm sympathetic to this view, which is one of the reasons I supported the payroll tax cuts we passed in December. It's also why we have to use a scalpel and not a machete to reduce the deficit, so that we can keep making the investments that create jobs.
The only jobs government creates is government jobs. Now if you think we should all work for the government, why, just come out and say so.
But doing nothing on the deficit is just not an option. Our debt has grown so large that we could do real damage to the economy if we don't begin a process now to get our fiscal house in order.
Finally, there are those who believe we shouldn't make any reforms to Medicare, Medicaid or Social Security out of fear that any talk of change to these programs will immediately usher in the sort of radical steps that House Republicans have proposed. And I understand those fears.
But I guarantee that if we don't make any changes at all, we won't be able to keep our commitment to a retiring generation that will live longer and will face higher health care costs than those who came before.
And, remarkably, you manage to avoid making any suggestion about what those changes should be. All we know about your position is that you trust the government more than the stock market.
Indeed, to those in my own party, I say that if we truly believe in a progressive vision of our society, we have an obligation to prove that we can afford our commitments.
If we believe that government can make a difference in people's lives, we have the obligation to prove that it works, by making government smarter and leaner and more effective.
"We're going to eliminate waste, fraud, and abuse! Can I get an amen?"
Of course, there are those who simply say there's no way we can come together at all and agree on a solution to this challenge. They'll say the politics of this city are just too broken, the choices are just too hard, the parties are just too far apart.
And after a few years on this job I have some sympathy for this view.
(LAUGHTER)
But I also know that we've come together before and met big challenges.
Ronald Reagan and Tip O'Neill came together to save Social Security for future generations.
The first President Bush and a Democratic Congress came together to reduce the deficit.
President Clinton and a Republican Congress battled each other ferociously -- disagreed on just about everything -- but they still found a way to balance the budget.
And in the last few months, both parties have come together to pass historic tax relief and spending cuts. And I know there are Republicans and Democrats in Congress who want to see a balanced approach to deficit reduction.
And even those Republicans I disagree with most strongly I believe are sincere about wanting to do right by their country. We may disagree on our visions, but I -- I -- I truly believe they want to do the right thing.
So I believe we can and must come together again.
This morning, I met with Democratic and Republican leaders in Congress to discuss the approach that I laid out today. And in early May, the vice president will begin regular meetings with leaders in both parties with the aim of reaching a final agreement on a plan to reduce the deficit and get it done by the end of June.
There is a plan to reduce the deficit. The House should vote on Paul Ryan's budget plan and send it to Majority Leader Reid, and let him know they'll be ready to set up a conference committee to work out the differences between the Republican plan and the Democratic one - if the Democrats even have one.
I don't expect the details in any final agreement to look exactly like the approach I laid out today. This is a democracy; that's not how things work. I'm eager to hear other ideas from all ends of the political spectrum.
And though I'm sure the criticism of what I've said here today will be fierce in some quarters and my critique of the House Republican approach has been strong, Americans deserve and will demand that we all make an effort to bridge our differences and find common ground.
Actually, I don't want to find common ground. I don't want to "split the difference." You're driving the country off a cliff; why should I want to find common ground with you?
This larger debate that we're having -- this larger debate about the size and the role of government -- it has been with us since our founding days. And during moments of great challenge and change, like the one that we're living through now, the debate gets sharper and it gets more vigorous. That's not a bad thing. In fact, it's a good thing.
It's long overdue.
As a country that prizes both our individual freedom and our obligations to one another, this is one of the most important debates that we can have.
But no matter what we argue, no matter where we stand, we've always held certain beliefs as Americans.
We believe that in order to preserve our own freedoms and pursue our own happiness, we can't just think about ourselves. We have to think about the country that made these liberties possible. We have to think about our fellow citizens with whom we share a community. And we have to think about what's required to preserve the American dream for future generations.
And your answer largely amounts to, "Make the people who pay most of the taxes pay even more."
This sense of responsibility -- to each other and to our country -- this isn't a partisan feeling. This isn't a Democratic or a Republican idea. It's patriotism.
The other day I received a letter from a man in Florida. He started off by telling me he didn't vote for me and he hasn't always agreed with me. But even though he's worried about our economy and the state of our politics, here's what he said.
He said, "I still believe. I believe in that great country that my grandfather told me about. I believe that somewhere lost in this quagmire of petty bickering on every news station, the American dream is still alive."
This is not petty bickering. We are arguing about the fate of our country.
"We need to use our dollars here rebuilding, refurbishing and restoring all that our ancestors struggled to create and maintain. We as a people must do this together, no matter the color of the state one comes from or the side of the aisle one might sit on."
I still believe -- I still believe as well. And I know that if we can come together and uphold our responsibilities to one another and to this larger enterprise that is America, we will keep the dream of our founding alive in our time, and we will pass it on to our children, we will pass on to our children a country that we believe in.
Thank you, God bless you, and may God bless the United States of America.
(APPLAUSE)
Thank you.
Nothing of substance here. Just the same old liberal mantra - make the people who pay most of the taxes pay more, require nothing from the people who pay no taxes, cut defense and only defense. Shameful.
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