Obama announces his plan for deficit reduction

President Obama announced today his plans for spending cuts and deficit reduction.

Obama called for a bipartisan approach to solving these issues, but referred to GOP proposals to "voucher-ize" Medicare as a call to "end Medicare as we know it."

In his proposal, Obama forecast $770 billion in savings over the next 12 years through non-security discretionary cuts, and another $400 billion in that time frame from the defense budget.

Obama's plan also called for a "failsafe" trigger, which would apply across-the-board spending cuts if the national debt, as a percentage of GDP, is not on the decline by 2014.

On entitlements, he proposed reducing "wasteful" subsidies and faulty payments, while cutting spending on prescription drugs by leveraging Medicare's purchasing power and coaxing generics into the market. He suggested "new incentives" for doctors to improve results and slow the growth of Medicare costs.

In addition, the income tax rates on the highest earners (families making over $250,000 a year) would revert to pre-George W. Bush rates.

I personally agree that at some level, whether it's those making over $250K or those making over $500K, or $750K - the wealthiest can afford some small increase to help pay down the country's debt.

Regarding Social Security, President Obama said he wants to strengthen the program for future generations without “putting at risk current retirees” or “slashing benefits for future generations.” Strengthen is a vague term. Some interpret that as possibly raising retirement age for future seniors.

I personally support that idea. The current retirement ages were determined at a time when people didn't live as long or as healthy as we do today. As someone who is 47 years old, I'm fine with raising the retirement age a year or two to "strengthen" the program.

Overall, I agree with Peter Peterson, Chairman of the Peter G. Peterson Foundation:

“Any successful long-term deficit reduction plan must be bipartisan, so both political parties will need to make compromises. Any viable plan must include both spending cuts and revenue increases, and should address all of the major areas of the budget, including tax expenditures, defense, entitlements and discretionary spending. There is no doubt that we can solve our problems in a comprehensive and compassionate way that achieves fiscal sustainability while preserving the social safety net for America’s vulnerable citizens and providing resources for important future investments in our economy."

Response from some governors across the country to Obama's proposals:

Minnesota Governor Mark Dayton: “A balanced approach to bringing down the national deficit with fairness and shared responsibility.”

Maryland Governor Martin O'Malley: President’s vision “to recover and rejuvenate our economy”

Delaware Governor Jack Markell: “I applaud the President for his commitment to tackling this serious challenge."

Vermont Governor Peter Shumlin: “Emphasis on shared responsibility and taking a balanced approach to revenues and spending”

Connecticut Governor Dannel P. Malloy: President “set the right tone for the bipartisan negotiations to begin”

Massachusetts Governor Deval Patrick: “Optimistic, inclusive vision for the country”