Obama’s $4 trillion Grand Bargain

July 7, 2011

The president says it’s time to go big (via Reuters):

After weeks of impasse, President Barack Obama and top congressional leaders are aiming for “something big” as they resume budget talks on Thursday to avert an imminent default. With Republicans showing new flexibility on taxes, Democrats say Obama will push negotiators to double their target to $4 trillion in budget savings over 10 years. That would be an ambitious goal, but there have been a few hints of progress since talks hit a brick wall two weeks ago.

1) If Obama wants a $4 trillion debt reduction package, how about the one his own debt commission produced last December:


2) But I don’t think Obama will agree to  or propose anything as sweeping as that. Instead, I would expect more than $1 trillion in savings from defense cuts, most of which will be tweaking the baseline of projected spending, which assumed perpetual war in Iraq and Afghanistan. Along with interest savings, that would be put you right around $2 trillion. Republicans may be offering $200 billion in new revenue from user fees and asset sales.

3) So how to close the remaining gap of roughly $2 trillion? Maybe another $400 billion in Medicare and Medicare savings.  And tweaks in how you measure inflation for Social Security benefits and tax brackets gets you another $150 billion, assuming Rs don’t view that as a tax hike.  And in his April speech, Obama called for $770 billion in non-security discretionary spending cuts over 12 years. To me, it still looks close to $1 trillion gap.

4) And recall that Obama’s debt speech which called for $4 trillion in debt cuts over 12 years would actually cut debt by just $2.5 trillion over ten years.

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

[…] bipartisan debt-talk meeting, President Barack Obama will lay out three dif more… Obama's $4 trillion Grand Bargain – Reuters Blogs (blog) – blogs.reuters.com 07/07/2011 Daily MailObama's $4 trillion Grand BargainReuters Blogs […]

Posted by News about Barack Obama issue #1 | | Pucketts ProjectsPucketts Projects | Report as abusive

[…] course, skepticism still looms large among the punditocracy. James Pethokoukis suspects that a massive portion of the spending cuts will come simply from reductions in baseline defense […]

Posted by Obama Leading Progress on Deficit Talks? | Race 4 2012 | Report as abusive

[…] "no" has now ignited alarm and anger among House Democrats at the report that Obama had put the "tweak" of Social Security on the bargaining table to get a budget deal with […]

Posted by Earl Ofari Hutchinson: Minorities Will Be the Biggest Casualties of Social Security Battle | Report as abusive