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President Obama Outlines Broad Plans to Reduce Deficit

SAUL LOEB/AFP/Getty Images(WASHINGTON) -- President Obama Wednesday outlined his own proposal for reducing the nation's deficit by $4 trillion in the next 12 years, calling it a "more balanced approach" than the one championed by congressional Republicans, and emphasized that everything in the budget must be up for discussion.

In a 44-minute speech at George Washington University that included few specific targeted cuts but many broad objectives, Obama said that in order to reach his deficit reduction goals, he would focus on four key areas: keeping domestic spending low; cuts to the Pentagon budget; health care savings in Medicare and Medicaid; and taxes.

The president said these ideas come from the recommendations of the bipartisan fiscal commission and builds on the roughly $1 trillion in deficit reduction that he already proposed in his 2012 budget.

"We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt," he said. "And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs, and win the future."

With the 2012 presidential campaign looming, Obama tried Wednesday to draw a clear contrast between his plan and that which congressional Republicans have put forward, which has drawn support from several Republican presidential contenders.

The president said that while both sides want to make dramatic spending cuts, their approach goes after the wrong targets and is less about deficit reduction than it is about "changing the basic social compact in America."

Specifically, Obama said that the changes he has proposed for Medicare and Medicaid will keep the commitments to the nation's seniors while still saving $500 billion during the next 12 years and an additional $1 trillion by 2033.

The president also pledged to increase the tax rates on upper-income Americans -- individuals who make more than $200,000 a year or families that make more than $250,000 -- because they can afford to pay a little more. In December, the president agreed to extend the Bush tax cuts for all Americans in order to keep his campaign pledge to prevent a tax increase for the middle class. That won't happen again, he said Wednesday.

Yet even before Obama delivered his remarks, Republicans were already lining up to reject his proposals.

Back from a meeting at the White House earlier Wednesday, Republican leaders in Congress warned Obama that they will not agree to raise taxes in an effort to rein in the country's rising deficits, calling them a "non-starter."

Boehner described the White House meeting as "a very frank and serious discussion" about the debt crisis, but suggested he has tough standards for the administration to meet in order to sway his support from chairman Ryan's budget plan to address the deficit.

House Majority Leader Eric Cantor of Virginia echoed Boehner and said that raising taxes is not the answer.

"And without even looking at a poll, my finely honed political skills tell me that almost no one believes they should be paying higher taxes," he said to polite laughter.

Obama said that the continuing budget and spending debate in Washington is more than just "numbers on a page, more than just cutting and spending," perhaps giving a preview of his 2012 reelection theme.

"It's about the kind of future we want," he said. "It's about the kind of country we believe in."

Copyright 2011 ABC News Radio 

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