Obama Offers Plan to Trim $4 Trillion From Deficit in 12 Years

President Barack Obama vowed to cut $4 trillion in cumulative deficits within 12 years through a combination spending cuts and tax increases, setting the stage for a fight with congressional Republicans over the nation’s priorities.

In presenting his long-term plan for closing the budget shortfall, Obama set a target of reducing the annual U.S. deficit to 2.5 percent of gross domestic product by 2015, compared with 10.9 percent of GDP projected for this year. He reiterated his support for overhauling the tax code to lower rates while closing loopholes and ending some breaks to increase revenue.

“We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt,” Obama said in prepared remarks for a speech today at George Washington University in the capital. “And we have to do it in a way that protects the recovery.”

Over the next five years, the administration forecasts the government will pile up a cumulative deficit of $3.8 trillion; over the decade, the cumulative deficits would rise to $7.2 trillion. With today’s proposal, Obama is going beyond the fiscal 2012 budget he presented on Feb. 14, which forecast cutting the deficit by $1.1 trillion over a decade.

As with his budget, Obama in his latest plan calls for ending the Bush-era tax cuts for the wealthiest Americans, which are set to expire in 2012.