WASHINGTON (MNI)- The following text is the second part of a fact
sheet released by the White House Wednesday with details of the deficit
reduction proposals announced by President Barack Obama:

2. A Deficit Reduction Goal and Enforceable Debt Failsafe

The framework the President announced today offers a balanced
approach to maintaining our economic recovery while living within our
means. It centers on the following goal:

– Achieving $4 trillion in deficit reduction over 12 years or less.
The President believes that this goal is achievable over a 12 year
period, consistent with the goals of promoting economic growth that
benefits the middle class and strengthening the health and economic
security of our nation’s seniors, people with disabilities and most
vulnerable. The Administration projects that this framework will reduce
deficits as a share of our economy to about 2.5% of GDP in 2015, and put
deficits on a declining path toward close to 2.0% of GDP toward the end
of the decade.

– Deficit reduction should be phased in over time to ensure that
fiscal policy does not undermine the momentum of our economic recovery.
Our economy has created 1.8 million private sector jobs over the last 13
months and the pace of job growth has accelerated in recent months.
While long-term deficit reduction is a crucial component of the
President’s economic strategy, this goal cannot be used as an excuse to
undermine the near-term policies and investments we need to continue our
economic recovery.

– Deficit reduction efforts should be held accountable by a “Debt
Failsafe” trigger: The President is confident that, with a robust
economic recovery and bipartisan agreement on deficit reduction, we will
put our debt as a share of the economy on a declining path by the second
half of the decade. However we must provide a strong incentive for
Congress to act on a deficit reduction framework and renew confidence
that we will hit this goal. Therefore, the President is calling for:

* A debt failsafe that will ensure that our nation’s debt is on a
declining path as a share of our economy. If by 2014, budget projections
do not show that the debt-to-GDP ratio has stabilized and is declining
in the second half of the decade, the failsafe will trigger an across
the board spending reduction, including on spending through the tax
code.

* The trigger will ensure that deficits as a share of the economy
average no more than 2.8% of GDP in the second half of the decade.

* Consistent with prior fiscal enforcement mechanisms put in place
by Presidents Reagan, George H.W. Bush and Clinton, the trigger should
not apply to Social Security, low-income programs, or benefits for
Medicare enrollees.

* The trigger should also include a mechanism to ensure that it
does not exacerbate an economic downturn or interfere with our nation’s
ability to respond to a national security emergency.

3. Discretionary Spending

– Non-Security Savings Equal to the Fiscal Commission’s, While
Investing In Our Future:

* The budget agreement negotiated by the President last week
represented the largest one-year reduction in discretionary spending in
our history, even as it invested in areas key to our long-run economic
growth and competitiveness.

* We should build on this year’s savings, while ensuring that we
continue to make the investments we need to win the future and not
threaten the economic recovery. The President believes we can do so
while generating additional deficit reduction by cutting non-security
spending to levels consistent with what the Fiscal Commission
recommended over the next decade.

* This would generate an additional $200 billion in savings over
10 years beyond the $400 billion in savings from the President’s Budget.
Over 12 years, it will generate a total of $770 billion in deficit
reduction.

– Additional Discipline on Security Spending While Keeping America
Safe:

* While the President will never accept cuts that compromise our
ability to defend our homeland or America’s interests around the world,
Secretary Gates has shown over the last two years that there is
substantial waste and duplication in our security budget that we can and
should eliminateproposing savings of $400 billion in current and future
defense spending.

* As part of a comprehensive deficit reduction framework, the
President is calling for pushing harder to not only eliminate waste and
improve efficiency and effectiveness, but conduct a fundamental review
of America’s missions, capabilities, and our role in a changing world.

* The framework sets a goal of holding the growth in base security
spending below inflation, while ensuring our capacity to meet our
national security responsibilities, which would save $400 billion by
2023. (The President will make decisions on specific cuts after working
with Secretary Gates and the Joint Chiefs on the comprehensive review.)

* Note: this deficit reduction is in addition to the savings
generated from ramping-down overseas contingency operations.

4. Health Care

– Medicare and Medicaid Savings of $480 Billion by 2023 and At
Least an Additional $1 Trillion over the Subsequent Decade, Providing
Better Care at Lower Costs:

* Building on the Affordable Care Act, the President is proposing
additional reforms to Medicare and Medicaid designed to strengthen these
critical programs by reducing waste, increasing accountability,
promoting efficiency, and improving the quality of care, without
shifting the cost of care to our seniors or people with disabilities.

* The framework will save $340 billion over ten years and $480
billion by 2023 (including the proposals already included in the
President’s Budget). This framework includes the same aggregate savings
that House Budget Committee Chairman Paul Ryan proposed in his November
2010 plan with Alice Rivlin and an amount sufficient to fully pay to
reform the Medicare Sustainable Growth Rate (SGR) physician payment
formula while still reducing the deficit.

* Over the subsequent decade, the President’s proposal will save
well over $1 trillion by further bending the cost curve, doubling the
savings from the Affordable Care Act.

* The President’s framework offers a stark contrast with the House
Republican plan that would increase seniors’ health costs by $6,400
annually starting in 2022, raise health insurance premiums for
middle-class Americans and small businesses, cut Federal Medicaid
spending by one-third by the end of the decade, and increase the number
of uninsured by 50 million.

– The President’s framework proposes specific reforms to strengthen
Medicare and Medicaid over the long term, including:

* Addressing the long-term drivers of Medicare cost growth: The
President’s framework would strengthen the Independent Payment Advisory
Board (IPAB) created by the Affordable Care Act. The IPAB has been
highlighted by economists and health policy experts as a critical
contributor to Medicare’s solvency and sound operations. Under the
Affordable Care Act, IPAB analyzes the drivers of excessive and
unnecessary Medicare cost growth.

-more- (2 of 3)

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MGU$$$,MFU$$$]