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Where they'll butt heads on debt reduction

From The CNN Political Unit
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Obama proposes $4 trillion deficit cut
  • President Obama presents his debt reduction plan week after GOP unveils its plan
  • Big differences on Medicare, Medicaid and health care
  • While both call for simplifying tax system, they're far apart on tax rates

(CNN) -- President Obama on Wednesday presented his debt-reduction plan, which he says will slash $4 trillion from the debt over 12 years. Republicans, in their plan unveiled last week, say they'll cut $4.4 trillion over a decade.

While both Republicans and Democrats promise to work together to bring the nation's debt under control, the two plans are far apart on some critical components.

Here are some areas in which they don't see eye-to-eye:

Health care

Not much common ground here -- the GOP plan rolled out by House Budget Committee chairman Paul Ryan calls for $725 billion in savings by cutting subsidies to Americans to help pay for health care insurance, which is, in essence, repealing Obama's health care reform efforts.

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Another non-starter -- the Republican plan has seniors purchasing private health care insurance from an insurance exchange with the government subsidizing premiums up to a limit. Proponents say that would shift costs to wealthier seniors. Obama says he'll reform Medicare and save $340 billion over 10 years and $480 billion by 2023 through reducing waste, increasing accountability and promoting efficiency. He vowed that he would not allow Medicare to be "undermined."


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The GOP wants to administer this health program for the poor by providing block grants to states instead of the current matching federal and state funding. They say it will give governors more flexibility in using the funds and all the feds to control costs. Obama promises to set up a task force of governors for them to help make the program more efficient and offer incentives for high-cost beneficiaries, including those who are eligible for both Medicaid and Medicare -- the White House says those 9 million beneficiaries are 15% of Medicaid's enrollment but consume nearly 40% of its spending.

What would the Tea Party cut?

Social Security

They're in agreement -- leave it alone. The Ryan plan does not address Social Security. Obama's plan says that it doesn't consider Social Security as a driver of the current debt problem but acknowledges that it faces long-term challenges that need to be addressed sooner rather than later.


They both agree that tax loopholes need to be closed, and that the tax system needs to be simplified. But that's about it. Ryan's plan calls for dropping the highest individual and corporate rates from 35% to 25% and make up for that by closing loopholes and eliminating tax credits and carve-outs. Obama wants to end the Bush-era tax cuts on families who make more than $250,000 a year.

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The GOP plan calls would raise revenue by lifting moratoriums on oil drilling. Obama's plan calls for investing savings into clean energy.