GOP Reaction to Obama's Deficit Reduction Speech

The tone of President Obama's deficit reduction speech was a bit dismal. He clearly was not in comfortable territory and he used the speech to make mean-spirited criticisms of the GOP plan to reduce the deficit offered several days ago by Rep Paul Ryan. It was not a speech that rose to the occasion. It was a campaign speech given as the newly announced re-election candidate for President.

Obama called Ryan's plan "deeply pessimistic."

Rep Paul Ryan was not impressed with the speech delivered by President Obama at George Washington University addressing deficit reduction. Ryan said, "I'm very disappointed in the President". He went on to say it was a political broadside from the campaigner-in-chief. "Rather than building bridges, he is poisoning wells." According to Ryan, Obama's speech was "dramatically inaccurate and hopelessly inadequate".



Rep Dave Camp said that Obama's rhetoric was "unnecessary, unhelpful." Camp is Chairman of the House Ways and Means Committee.

In a statement from the Ways and Means Committee, the call for increased taxation is criticized:

During the President's speech today, he called for tax increases on the American people and small businesses in addition to those contained in his February budget proposal. It is important to keep in mind the negative impact that higher taxes have on job creation.

Mr. President, We Don’t Have a Revenue Problem, We Have a Spending Problem

During the 12 years since 1940 in which the federal budget was balanced or we experienced a budget surplus, spending never exceeded 19.4 percent of GDP. The President’s FY 2012 Budget Proposal calls for a massive increase in spending. According to an analysis by the Congressional Budget Office (CBO), Federal Government spending as a percentage of GDP will climb to more than 24 percent in the next 10 years

Obama modeled some of his speech after recommendations being worked on in the Senate by a group of 6 - the Gang of Six - comprised of three Republicans and three Democrats. This group, however, is looking to cut $4 trillion in 10 years, not 12 as Obama announced. The additional two years would leave major provisions until the very end of the timeframe, which is a political decision.

The work of the Gang of Six is modeled on recommendations of the fiscal commission Obama appointed last year. On Monday, White House press secretary Jay Carney said the commission had “created a framework that may help us reach a deal and a compromise.”

“The fiscal commission showed that you need to look at entitlements, you need to look at tax expenditures, you need to look at military spending, you need to look at all of these issues,” Carney said. “You can’t — you can’t simply slash entitlements, lower taxes and call that a fair deal.”

True enough. But Obama didn't address huge entitlement committments like Social Security. He kicks it down the road. The Gang of Six, however, has been unable to come together will recommendations. One member, Senator Coburn, said: “It’d be pretty hard for [Obama] to hitch himself to something that doesn’t exist yet,” Coburn said. “There’s nothing I’ve agreed to that could be announced this week.”

Obama's plan was laden with typical Democratic rhetoric of taxing "the rich" and knocking down straw man arguments. The problem is, "the rich" is sited with an amount beginning at $250,000. This hits small business owners who file as individuals instead of businesses. This will lead to a continued stifling of small business hiring and the economic recovery will continue at the current slow pace.

Ryan's plan - The Road to Prosperity - cuts $6 trillion in 10 years. This plan will be voted on in the House this week.