After the recent financial cries in the U.S., almost all individuals are experiencing various economic hardships like job loss, underemployment and wage reduction, and are incessantly facing problem in managing their finances. So in lieu of managing finances, a large number of people are drowning in the sea of debt and struggling hard to save their neck. According to the latest statistics of the Federal Reserve, the total amount of consumer debt in the United States stands at nearly $2.4 trillion.
However, Obama’s debt reduction plan is set to land on Monday in the laps of the 12 members of the Congress’ bipartisan debt committee. President has said that his plan would offer specific proposals that can achieve savings, can balance both spending cuts and tax increases, and can stabilize debt in the long run. The plan aims to cut the deficit by $4 trillion over the next 12 years. Through the plan, President’s intention is to allow the Bush-era tax cuts for families who have earning above $250,000 a year or individuals earning above $200,000. The White House has insisted that every aspect of the government must be considered as part of a serious discussion on debt, including revenues.
However, it seems to be a sure bet that Obama’s plan will not satisfy everyone. That is because on one hand, Democrats want to see tax increases on high-income earners, on the other, Republicans have warned that they will not consider any plan that includes tax increases. As far as tax reform is concerned, President might endorse a reduction in top marginal tax rates to roughly 28% for individuals and corporations in conjunction with the elimination of many deductions and credits.
Obama has promised in his speech at White House at 1:30 p.m. EDT Wednesday, his plan would include modest adjustments to health care programs like Medicare and Medicaid. But he does not intend to bring any drastic changes in the program. He has proposed to rise the eligibility age for Medicare. By this some meant that he may recommend savings in the program’s administration and payment reimbursement rather than changes to benefits directly. The President’s move is also intended to serve as a counter to a major Republican proposal from Rep. Paul Ryan of Wisconsin.
Ryan’s plan seek to cut more than $ 5 trillion in spending over the next decade, that will build around a drastic reshaping of Medicare and other federal safety-net entitlement programs, and would lower the tax rate of the nation’s top payers. In this context, it is to be noted that the President intends to balance everything. What is not acceptable in President’s view and in the Americans’ view – is a plan that achieves serious deficit reduction only by asking for sacrifice from the middle class, seniors, the disabled and the poor, and while providing substantial tax cuts to the very well off.
However, Mitt Romney, the former Governor of Massachusetts believes that Obama’s proposals are too little. He also believes that instead of supporting spending cuts that lead to real deficit reduction and true reform of Medicare and Medicaid, President has dug deep into the matter by highlighting “higher taxes”. In conclusion, Obama's debt reduction plan will bring a new phase of economic resolution in the U.S. and will waive off all the financial obligations.