WASHINGTON – In an April 13 televised speech, President Barack Obama outlined his plan for reducing the federal deficit and cutting Medicare costs. Unlike the GOP plan, he said, his plan would "use a scalpel, not the machete."
The speech came just prior to Congress' passage on April 14 of a FY2011 budget that's nearly $40 billion less than last year's budget.
With the 2011FY budget out of the way, both parties have moved on to battling over proposals to reduce the deficit beyond 2011. Medicare will play a major part of that discussion.
In his speech, Obama countered the Republican plan for reducing Medicare and Medicaid spending, introduced in mid-April by House Budget Chairman Rep. Paul Ryan (R-Wis.).
Ryan's plan for Medicare's future would end direct payment to healthcare providers from the federal government, instead providing health insurance vouchers to seniors. The vouchers would amount to about $15,000 annually, calling for seniors to pay more out of their own pockets.
Ryan's Medicaid proposal would also replace the current federal matching of state funds with block grants.
Obama said Ryan's plan would "end Medicare as we know it," and defended Medicare and Medicaid programs as part of "what makes America great."
The President said his plan to reduce Medicare spending includes steps to cut fraud and abuse and a push for lower prescription drug prices.
For Medicaid reductions, Obama said the federal government should work with governors "to demand more efficiency and accountability" from the program.
Obama said the Affordable Care Act should cut Medicare spending by $500 billion by 2023 and an additional $1 trillion in the following decade through various health reform provisions.
He also called for tax increases for America's most wealthy.
Republicans criticized Obama's plan as being too vague and opposed the tax increases.
"Outside of Washington, it's obvious that the problem isn't that people are under-taxed, but that Washington overspends," said Sen. Charles Grassley (R-Iowa). "Washington needs to get behind policies that clamp down on spending and grow the economy."
Ryan defended his plan in an April 15 statement, saying, "We cannot accept an approach that starts from the premise that ever-higher levels of spending and taxes represent America's new normal."
"We have an obligation to fulfill the mission of health and retirement security for current retirees and future generations," Ryan wrote. "We have a historic commitment to limited government and free enterprise. And we have a duty to leave the next generation with a more prosperous nation than the one we inherited."