<http://www.reuters.com/> Reuters Obama deficit plan to seek tax reform, spending cuts Photo 9:44am EDT By Alister Bull <http://blogs.reuters.com/search/journalist.php?edition=us&n=alister.bull&;> and Caren Bohan <http://blogs.reuters.com/search/journalist.php?edition=us&n=caren.bohan&;> WASHINGTON (Reuters) - President Barack Obama will propose tax reform, defense savings and changes in government healthcare spending Wednesday as criticism swells over his leadership on curbing a bloated U.S. budget deficit. Obama, accused of lying low on an issue polls show will be a major factor in the 2012 presidential election, will explain his vision for tackling the long-term U.S. deficit and debt in a speech in Washington at 1:35 p.m. (1735 GMT). "The president will lay out four steps to achieve this balanced approach," a White House official said, citing defense budget savings, waste from healthcare, domestic spending control, and "tax reform that reduces spending in our tax code" -- a reference to closing tax loopholes. It was not clear how specific Obama would be but expectations were high for him to provide details. The president was due to brief Republican and Democratic congressional lawmakers at the White House before his speech. Obama will try to use the speech to regain control of the spending debate by drawing a sharp contrast with a Republican plan to combine steep spending cuts and lower taxes to reduce the deficit by $4.4 trillion in 10 years. Obama was expected to talk about recommendations made last year by his debt commission, co-chaired by Republican Alan Simpson and Democrat Erskine Bowles, as well as spending cuts. At that time, Obama declined to endorse their proposals. "The commission recommended 'don't make substantial cuts now while the economy is struggling to right itself and create jobs,' but long-term get our budget deficit under control. I think he's going to do a balanced approach," Steny Hoyer, the No. 2 Democrat in the House of Representatives, told CNN. The White House, which also wants Congress to raise the country's borrowing limit before a $14.3 trillion ceiling is reached as early as mid-May, says the Republican deficit plan unfairly favors the rich over ordinary Americans. "What is not acceptable ... is a plan that achieves serious deficit reduction only by asking for sacrifice from the middle class ... while providing substantial tax cuts to the very well-off," White House press secretary Jay Carney said. The International Monetary Fund urged the United States to outline credible measures to reduce deficits. Obama's budget proposal for next year already includes allowing Bush-era tax cuts to expire for American families making more than $250,000 a year. Republicans made clear that raising taxes was not their focus. "I don't think there are many Americans right now who want to pay more taxes," Eric Cantor, the No. 2 Republican in the House, said on CBS' "The Early Show." "I think most people understand that Washington doesn't have a revenue problem, it has a spending problem." DEBT LIMIT Obama wants reducing the deficit to be a shared sacrifice that includes spending cuts and increased revenue from taxes. "The president will make clear that while we all share the goal of reducing our deficit and putting our nation back on a fiscally responsible path, his vision is one where we can live within our means without putting burdens on the middle class and seniors," the White House official said. The White House warns that failing to lift the limit could cause an "Armageddon-like" market collapse, but wants the debt ceiling and spending debates to be kept separate. Republicans have seized on references to the reform of entitlement spending as an admission that Obama reversed course, but raised doubts he was sincere. They say they will not vote to raise the debt limit without agreement on significant cuts in spending. Their determined stance on spending and deficits helped defeat Obama's Democrats in the 2010 congressional elections and will be a potent tool in the 2012 White House race. The budget deficit is estimated to hit $1.65 trillion this year, or almost 11 percent of GDP, while U.S. borrowing could reach a legal limit of $14.3 trillion next month unless the ceiling is raised, potentially triggering a debt default. Two-thirds of Americans voiced a great deal of concern about the deficit in a Gallup survey last month. Other polls show voters who backed Obama in 2008, but did not vote for Democrats in November 2010 could be persuaded to support him in 2012 if they believed he had a plan to tackle the deficit. [Non-text portions of this message have been removed] ------------------------------------ -------------------------- Want to discuss this topic? Head on over to our discussion list, [email protected]. -------------------------- Brooks Isoldi, editor [email protected] http://www.intellnet.org Post message: [email protected] Subscribe: [email protected] Unsubscribe: [email protected] *** FAIR USE NOTICE. This message contains copyrighted material whose use has not been specifically authorized by the copyright owner. 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