The battle over the national debt and fiscal responsibility has been joined. President Obama laid out his own idea of a path to prosperity Wednesday, countering a rival plan set forth last week by Rep. Paul Ryan (R), the chairman of the House Budget Committee. The plans share important similarities: big spending cuts, a form of automatic trigger if Congress fails to act, and reforms to entitlements like Medicare. But the contrasts are clear and significant.
Here are five prominent differences between President Obama's and Congressman Ryan's plans on deficits and debt:
Republicans call for holding the line on tax increases, while Obama said the budget problems demand "shared sacrifices" including higher tax revenue. The president's plan to cut the cumulative federal deficits of the next 12 years by $4 trillion would include roughly $1 of new tax revenue for every $3 in spending cuts.
The Ryan plan would hold federal revenues at or below 19 percent of gross domestic product – essentially no increase from recent history. The Republican proposal would consolidate tax brackets and reduce the top individual rate from 35 percent to 25 percent.
Both sides agree on the need to simplify the tax code, keep tax rates low, and "broaden the base" of revenue by reducing the number of credits and deductions. But where Republicans want the reforms to be revenue-neutral, Democrats say more revenue is needed at a time when mandatory spending is poised to rise due to baby boomer retirements.
While not claiming that taxes on the rich can close the government's fiscal gap, Obama attacked the Ryan plan for cutting already-low taxes on the wealthy.
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