Obama and Ryan present two different directions on debt, deficit reform.

• Author: Roberts, Tyler
• Position: WASHINGTON BEAT

Despite the cherry blossoms in full bloom in Washington, D.C., at press time, things were less rosy on Capitol Hill, where Republicans and Democrats continue debating how to handle the debt and deficit situation. With the United States close to hitting its debt ceiling, the two sides argue over if and how they should raise it. The warning from Standard & Poor's that it could eventually lower its credit rating on U.S. debt, will only fuel the intensity of the debate.

The nation is expected to hit its current $14.3 trillion debt limit by mid-May. Treasury Secretary Timothy F. Geithner has said he could take emergency measures to buy time until July 8, but if no actions were taken by then, the government would fall into default.

With so many unanswered questions, two proposals regarding the 2012 federal budget are dominating the discussion: one from President Barack Obama and the other from House Budget Chairman Paul Ryan (R-Wis.), both claiming theirs is the solution.

THE OBAMA PLAN

President Obama's plan, "A Balanced Approach," calls for a reduction in the deficit by $4 trillion in 12 years or less. This would be achieved in part by allowing the 2001 and 2003 Bush-era tax cuts to expire for those in the top two income brackets. It would limit itemized deductions for the top 2 percent of Americans, which, according to White House estimates, would assist in reducing the deficit by almost $320 billion. The plan also calls for a savings of $750 billion in domestic spending over the next 12 years, while instituting a five-year, non-security discretionary spending freeze.

Republicans strongly disagree with the president's proposal to let some of the Bush-era tax cuts expire. A recently published study by Robert Carroll and Gerald Prante of Ernst and Young notes that flow-through businesses account for nearly 95 percent of all business entities. With an already fragile economy, Republicans believe that allowing the tax cuts to expire would seriously hurt businesses and the chances of a strong economic revival.

In many ways, President Obama has yet to take a prominent role in the discussion of America's fiscal future. He convened the National Commission for Fiscal Responsibility and Reform last year, but was later criticized for not adopting the group's findings when he released his fiscal year 2012 budget in February. Though Obama's plan was scant on detail, his more recent delineation of a broad plan and subsequent public appearances on its behalf...