President Obama laid out a broad plan Wednesday to address soaring budget deficits through tax increases and entitlement reforms.

In a speech at George Washington University, Mr. Obama set a goal of reducing the cumulative annual deficits of the next 12 years by $4 trillion. That benchmark far outstrips the $1.1 trillion reduction in deficits over 10 years that he laid out two months ago in his fiscal year 2012 budget – a point that feeds the Republican charge that Wednesday’s initiative represents a presidential budget “do-over."

Still, Obama’s new plan is slightly less ambitious than the proposal of his bipartisan fiscal commission released last December, which would reduce deficits by $4 trillion in 10 years. And it is much less ambitious than last week’s GOP budget proposal, which the author, Rep. Paul Ryan (R) of Wisconsin, says would lower deficits by $5.8 trillion in the next decade, all through spending cuts.

Obama’s plan calls for a tax increase on the wealthy, a provision he failed to enact last December in his tax deal with the Republicans, plus other revenue increases achieved through tax reform.

“Some will argue we shouldn’t even consider raising taxes, even if only on the wealthiest Americans,” Obama said. “It’s just an article of faith to them. I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more.”

Obama's four-part plan

Obama laid out a four-part plan for deficit reduction:

Cuts in nonsecurity discretionary spending, while still investing in energy innovation, education, and infrastructure. The level of his cuts would be consistent with the recommendations of his bipartisan fiscal commission, saving $770 billion from 2012 to 2023.

Cuts in security spending deeper than those in his 2012 budget. Projected savings by 2023 are $400 billion.

Cuts in spending on Medicare and Medicaid by making delivery of health services more efficient and cost-effective. Obama says he would slow the growth of Medicare by strengthening an independent commission of doctors, nurses, medical experts, and consumers, which recommends ways of reducing unnecessary spending. He also proposes to make Medicaid more “more flexible, efficient, and accountable.” Savings from both programs would add up to $500 billion by 2023, he says.

Reforming the tax code in a way that closes loopholes, limits deductions, and allows tax rates to go down. Limiting itemized deductions for the wealthiest 2 percent of Americans would reduce the deficit by $320 billion over 10 years, Obama says. All told, his plan projects revenue from changes to the tax code at $1 trillion.

Obama also called for changes in some mandatory spending programs, such as agricultural subsidies and the federal pension insurance system. In that category, his plan projects savings of $360 billion by 2023.

And on Social Security, a particularly sensitive issue among his Democratic base, Obama did not offer specific reforms, just a repeat of his call “to strengthen Social Security for future generations.” He stated that while the program is “not the cause of our deficit, it faces real long-term challenges in a country that’s growing older.”

The White House's budget projections earlier this year suggested that cumulative annual federal deficits over the next 10 years (to 2021) would amount to $7.2 trillion. The nonpartisan Congressional Budget Office last month said the White House's figures might underestimate the 10-year deficits by $2.3 trillion.

A 'fail safe' debt trigger

Obama’s deficit-reduction framework aims to put the nation’s accumulated debt, currently at $14 trillion, on a “fail-safe trigger,” so that by the second half of the decade, it is on “declining path” as a share of US gross domestic product. To do that, he is calling on Congress to enact a “debt fail safe” that will trigger across-the-board spending reductions and revenue increases via the tax code, if the projected ratio of debt to GDP has not begun to decline by 2014.

Until Wednesday’s address, the president had held back on putting forth his own proposals on deficit reduction, waiting for his fiscal commission and then the House Republicans to go first. The debate will be fully joined after Congress’s Easter recess, when a bipartisan group of senators known as the Gang of Six will unveil its proposal. Both the Gang of Six and the Obama administration say their plans borrow heavily from the fiscal commission.

Obama stressed the need for bipartisanship in addressing the nation’s unsustainable fiscal path, and announced that in early May, Vice President Joe Biden would begin regular meetings with congressional leaders of both parties aimed at reaching a deficit-reduction plan by the end of June.

Though top Republicans – including House Budget Committee Ryan and House Speaker John Boehner – say they will not consider tax increases, Obama has an opening: Senate Republicans on the fiscal commission who voted in favor of sending the commission’s proposals to Capitol Hill for consideration. The commission plan included $1 in tax increases for every $3 in spending cuts, the same ratio as Obama’s new deficit-reduction framework.

Draws line on Medicare reform

Obama’s speech was perhaps most striking for its harsh treatment of Ryan’s budget proposal, which would end Medicare and Medicaid as entitlements, saving the government more than $1 trillion over 10 years.

“I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs,” Obama said. “I will not tell families with children who have disabilities that they have to fend for themselves.”

Ryan rejects the term “voucher” in descriptions of his plan, instead calling the aid “premium support” for the purposes of purchasing private insurance. Lower-income seniors would get more support than wealthier ones, as would seniors who become ill or have chronic health conditions. Ryan’s plan would turn Medicaid, government-run health insurance for the poor and disabled, into federal block grants, which are given to each state in a finite sum.

But in an olive branch to Ryan and the Republicans, Obama added a few lines to his prepared marks that suggested he believes they have the best interests of the country at heart.

“Even those Republicans I disagree with most strongly, I believe are sincere about wanting to do right by their country,” Obama said. “We may disagree on our visions, but I truly believe they want to do the right thing.”

Republican response

Republicans did not hesitate to strike back at Obama after the speech, particularly on the tax issue.

“More promises, hollow targets, and Washington commissions simply won’t get the job done,” said Speaker Boehner in a statement. “To reduce the economic uncertainty hanging over American job creators we must demonstrate that we’re willing to take action. And any plan that starts with job-destroying tax hikes is a nonstarter.”

Former Massachusetts Gov. Mitt Romney, who has just launched an exploratory committee to run for president, also lashed out: “President Obama’s proposals are too little, too late. Instead of supporting spending cuts that lead to real deficit reduction and true reform of Medicare, Medicaid, and Social Security, the president dug deep into his liberal playbook for ‘solutions’ highlighted by higher taxes.”