(Reuters) - President Barack Obama set a goal of reducing the U.S. deficit by $4 trillion within 12 years or less, in a speech outlining his plan to tackle the country’s massive debt problem.
Here are some highlights of the plan, according to a factsheet distributed by the White House before the speech:
DEBT REDUCTION GOAL, “DEBT FAILSAFE” TRIGGER
* Obama believes a goal of $4 trillion in deficit reduction over 12 years or less is achievable, and projects that it will reduce deficits as a share of the U.S. economy to about 2.5 percent of GDP in 2015, and put deficits on a path toward close to 2.0 percent of GDP toward the end of the decade.
* The plan includes a “debt failsafe” trigger that would require an across the board spending reduction if budget projections by 2014 do not show the debt-to-GDP ratio has stabilized and is declining in the second half of the decade.
The trigger would ensure that deficits as a share of the economy average no more than 2.8 percent of GDP in the second half of the decade, the White House said. It would not apply to Social Security, low-income programs, or benefits for Medicare enrollees and would include an unspecified mechanism to ensure it does not exacerbate an economic downturn or interfere with the ability to respond to a national security emergency.
* Obama will suggest cuts in non-security discretionary spending to generate an additional $200 billion in savings over 10 years beyond the $400 billion in savings in the fiscal 2012 budget proposal he offered in February. The White House said that would generate $770 billion in deficit reduction over 12 years.
* Obama’s debt reduction framework sets a goal of holding the growth in base security spending below inflation, while ensuring the capacity to meet national security responsibilities, which would save $400 billion by 2023, the White House said.
* In addition to his healthcare overhaul law, Obama is proposing reforms to the government’s Medicare and Medicaid insurance programs for the elderly and poor that the White House said would save $340 billion over 10 years and $480 billion by 2023, including proposals already included in Obama’s budget.
Over the subsequent decade, the president’s proposal will save well over $1 trillion, the White House said.
* In addition to savings already presented in Obama’s budget to such programs as agricultural subsidies and the federal pension insurance system, Obama’s plan includes a target of $360 billion in savings from other mandatory programs by 2023, the White House said.
* Obama is calling on Congress to undertake comprehensive tax reform that produces a system that is fairer, has fewer loopholes, is less complex and is not rigged in favor of those who can afford lawyers and accountants to game it, the White House said.
* Obama’s plan calls for efforts to strengthen the government’s Social Security pension system but does not seek to privatize it, although the factsheet offered no specifics.
Compiled by Patricia Zengerle, editing by Jackie Frank