Obama Targets Deficit with Higher Taxes, Lower Spending

President Barack Obama on Wednesday proposed a four-step plan to reduce the federal deficit by $4 trillion over the next 12 years and called on negotiations involving Congress and the White House to begin in May.

Obama's goal approaches a total in deficit reductions that Republicans proposed last week calling for $4.4 trillion in reductions over 12 years.

Obama proposes maintaining domestic spending low over the next 12 years, finding additional savings in the defense budget, reducing health care spending, and increase taxes from current levels for those earning above $250,000.

In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans. But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. And I refuse to renew them again, Obama said.

Obama broke down the $4 trillion in deficit reductions with broad proposals on spending cuts, tax reform and lower interest payments, but only offered a few specifics.

The breakdown over 12 years includes:

$2 trillion in spending cuts - Domestic ($750 billion), Defense cuts to be determined after review, Health Care ($500 billion).

$1 trillion from tax reform - $320 billion in 10 years from limiting itemized deductions for the wealthiest 2 percent of Americans. Obama did not say how the remaining $628 billion from tax reform would be obtained.

$1 trillion in lower interest payments