Obama ties funding to declining debt in proposal

President Barack Obama proposed on April 13 across-the-board spending cuts through a “debt failsafe” trigger that would go into effect if the government does not have a hold on its growth in the coming years. What he proposed was a general strategy and framework, leaving the effects on IT programs and the federal workforce unclear.

The automatic cuts would come if by 2014 the government’s ratio of debt-to-gross domestic product is not stabilized and even declining toward the end of the next decade, he said at a speech at George Washington University, where he proposed his framework for debt reduction.

“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,” Obama said. “That should be an incentive for us to act boldly now, instead of kicking our problems further down the road.”

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“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,” he also said.

The underlying debate is about the size and scope of government, Obama said.

Republicans have floated a number of bills and proposals to shave money off of federal spending with employee furloughs, pay cuts and other workforce measures. The government is right now operating under a two-year salary freeze that Obama instutitued. What his new proposal means for employees is unclear, but some clues may lie in the report issued last year by the president’s deficit commission, according to an article in FCW's sister publication Federal Daily.

"That report included a lot of tough proposals that would affect feds — including workforce cuts, a pay freeze and a recommendation to transform the Federal Employees Health Benefits Program into a 'defined contribution premium support plan,'” the article reads. "Such a plan would offer feds a fixed subsidy that would grow by no more than the gross domestic product, plus 1 percent each year. Federal retirees would be able to use that subsidy to pay for part of the Medicare premium.

"But as yet, those remain just recommendations. Right now, it’s still anyone’s guess."

Obama’s framework for debt reduction has three core fixes to the deficit problem. First, the government would keep annual domestic spending low through further cuts to programs and operations. He estimated such cuts could save $750 billion over 12 years.

He also wants the Defense Department to find more savings in the defense budget. He noted Defense Secretary Robert Gates’ efforts to hunt down waste, which uncovered $400 billion in wasteful spending in his department. Obama wants to do that again.

“We need 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,” he said.

However, Rep. Buck McKeon (R-Calif.), chairman of the Armed Services Committee, said his committee will propose billions in savings in the coming fiscal 2012 National Defense Authorization Act, which the committee will begin debating in the coming months. But he warned the president against announcing major cuts to defense spending while in two wars. McKeon also cautioned against designating dollar amounts before a full review of the military's mission.

"As Secretary of Defense Gates reminded us last year, announcing specific cuts prior to actually assessing the required missions and necessary force structure is ‘math, not strategy,’" McKeon said after the speech.

Finally, Obama proposes to further reduce health care spending in the budget. He wants to build on the savings he has projected from last year's health care reform legislation.

“Politicians are often eager to feed the impression that solving the problem is just a matter of eliminating waste and abuse — that tackling the deficit issue won’t require tough choices,” Obama said.

House Republicans recently proposed a more detailed deficit-reduction plan with spending cuts in all areas of government, including the Medicare, Medicaid and Social Security programs that Obama is less likely to touch.

Their plan would cut $6.2 trillion in government spending over the next decade compared with the president’s budget, and $5.8 trillion relative to the current-policy baseline. The plan would eliminate hundreds of duplicative programs, also banning earmarks while curbing corporate welfare. They want to bring non-security discretionary spending to below 2008 levels.

However, what Obama proposed is a general framework that is open to debate. Before the speech, a senior administration official said the president looked at basic categories of spending while not specifically dealing with the on federal employees or their programs.

Moving ahead, Obama wants Vice President Joe Biden to begin regular meetings with members of both parties in early May to work out a final plan for decreasing the deficit. And he wants a plan in June.

Obama recognized the tough debates to come, but said government leaders can reach a final deal.

“I don’t expect the details in any final agreement to look exactly like the approach I laid out today,” he said, but “I believe we can and must come together again.”