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The Obama they voted for

President’s fiscal plan comes down hard on the wealthy and unites the Democratic Party.

By Felicity Spector

One trillion dollars in new taxes – and a staunch defence of the welfare state.

That was the profoundly partisan sentiment at the heart of President Obama’s much-anticipated deficit reduction speech last night, as he laid out plans for spending cuts worth four trillion bucks over the next 12 years.

In the address at George Washington University, he laid the blame firmly on President Bush’s administration – for spending trillions while giving the country’s richest people even more in tax cuts. That, he said, had put America on a track it would take years to recover from – constantly spending more than it received.

Republicans, especially Tea Party activists, immediately accused him of playing catch-up, claiming he must have seen polls showing the public was behind their plans for sweeping $6trn cuts.

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But this was also Obama’s pledge to devise a cuts package that spread the pain – to protect those twin planks of social security protection, Medicare and Medicaid, albeit with some changes, and make richer Americans dig a bit deeper to pay for it.

Getting the poorest people to contribute more for their health coverage so the wealthiest got to keep a bit more of their wealth was just “not going to happen while I am president”. A rallying cry, indeed, to spark his Democratic base after dismaying many liberals last week, when he agreed to a compromise deal for this year’s budget involving some $38bn in cuts.

Obama did propose some pretty deep spending cuts of his own, of course – but they would come mainly from the federal defence budget, followed by health – and he promised that savings there would largely be made through lowering the cost of prescription drugs and concentrating on preventative treatment. Another trillion, he said, could also be saved by lowering interest payments on the federal debt. And the final trillion or so? Ending those Bush-era tax breaks.

New message of change

As several pundits have pointed out, Obama was also keen to promote a wider ideological message, one about the kind of America he wanted the country to be. He accused the Republicans – specifically Paul Ryan’s plans to make such deep cuts in social security – of trying to “change the social compact” and being “deeply pessimistic” about America’s future.

He appealed to a sense of community, citing Abraham Lincoln in his defence, as he outlined “a belief that we are all connected, and that there are some things we can only do as a nation”. Instead of making the less fortunate even worse off, he argued, the role of government was to invest in America’s people – all of them.

“We are a better country because of these commitments,” he said. “I’ll go further – we would not be a great country without [them].”

Liberals were mostly delighted by what the Washington Post called “the most ambitious defence [Obama] may ever have attempted of American liberalism and of what it means to be a Democrat”.

This was the Obama many of them hoped for when they voted him into office on that wave of enthusiasm back in 2008.

The instant reaction from conservatives obviously wasn’t favourable: one Republican, Representative Jeb Hensarling of Texas, hit out at what he saw as pure electioneeering.

“This wasn’t a speech designed to win the future, this was a speech designed for the president to attempt to win re-election,” Hensarling said. And other potentia 2012l presidential challengers lined up to offer their critique: Tim Pawlenty dismissed it as “little more than window-dressing”, while Mitt Romney called it “too little too late”.

The Republicans are also pressing ahead with their $6.4trn package of cut, putting proposals before Congress later this week. Even though it’s likely to pass the House of Representatives, where the GOP has a majority, Democrats in the Senate will probably block it, arguing that such deep cuts could push the country back into recession.

And Obama has the power to wield his presidential veto. So although he talked about bipartisan agreement and regular meetings between leaders from both parties, the House Speaker, John Boehner, has firmly ruled out any plans to increase taxes as a “non-starter”.

It could all come to a crunch when Congress has to vote on a technical issue – raising the $14.3trn debt limit ceiling – in a few weeks’ time. The Republicans say they’ll block it unless there’s a deal to reduce the long-term deficit. That would officially put the United States into default, which would not only be embarrassing, but could have a profound impact on economies around the world.

Right now, neither side looks in the mood to compromise. At least Joe Biden – who looked as if he was snoozing through a large chunk of the speech – may have caught up on a bit of shut-eye while he had the chance.

Felicity Spector is a deputy programme editor for Channel 4 News.