Obama expected to counter Republican budget plan

Marketplace Staff Apr 13, 2011
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Obama expected to counter Republican budget plan

Marketplace Staff Apr 13, 2011
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JEREMY HOBSON: Now let’s get to the President’s big deficit speech today. He’s expected to call for changes to entitlement programs as well as cuts to defense spending and tax increases. This is the Democratic counter to last week’s Republican plan for long-term deficit reduction.

Richard DeKaser is an economist with the Parthenon Group. He’s with us live, as he is each Wednesday from Boston. Good morning Richard.

RICHARD DEKASER: Good morning.

HOBSON: What are you going to be watching for in the President’s speech?

DEKASER: Well, I don’t think there’s going to be a lot here by way of details, but we’re going to see a broad philosophical response to the republican plan. And that’s going to entail, as you mentioned already, tax increases. And I think the real purpose here to distinguish the White House and the democratic part from the republican plan. They’re going to breach the topic of revenue enhancements, which is never popular. In following suit, the republicans also breech some bright red lines by embracing cuts in entitlement programs. So we’re starting to see a serious conversation I think beginning to roll out.

HOBSON: And when you say revenue enhancements, of course, that’s code-word for tax increases. Richard, don’t we just end up with two plans though that don’t really have a big chance of getting passed through Congress?

DEKASER: Oh I think that’s absolutely right. It’s early in the game, negotiations often start far apart, that’s where we are, and if you want to look underneath these broad philosophical positions, you can always find some numbers. Basically the Ryan plan gets us down to federal revenues as a share of GDP at about 18 percent in 10 years. The White House budget, coming out earlier this year was closer to 20 percent, and that two point difference is where we’re going to be talking about taking the government over the course of the next year.

HOBSON: Richard DeKaser, economist with the Parthenon Group, thanks so much.

DEKASER: My pleasure.

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