Hold On To Your Wallet – Obama To Focus On Deficit Reduction In 2011

Get ready for it. President Obama, who, along with his fellow Democrats in the Congress, have run up the deficit to an historic level. Someone’s got to pay for it.

The president has signaled that at the start of the new year, he will speak more directly to the country about the financial choices ahead. “If we’re going to get serious about the deficit, then we’re going to have to look at everything: entitlements, defense spending, revenues. … And that’s going to be a tough conversation,” he said.

Oh, and he’s also going to focus on enforcing Obamacare and ramming through more energy regulations.

The Wall Street Journal reported a few of the ideas being floated around.

Sacrosanct tax breaks, including deductions on mortgage interest, remain on the table just weeks before the deficit commission issues recommendations on policies to pare back with the aim of balancing the budget by 2015.

The tax benefits are hugely popular with the public but they have drawn the panel’s focus, in part because the White House has said these and other breaks cost the government about $1 trillion a year.

At stake, in addition to the mortgage-interest deductions, are child tax credits and the ability of employees to pay their portion of their health-insurance tab with pretax dollars. Commission officials are expected to look at preserving these breaks but at a lower level, according to people familiar with the matter.

The officials are also looking at potential cuts to defense spending and a freeze on domestic discretionary spending. It is unclear if the 18-member panel will be able to reach an agreement on any of the items by a Dec. 1 deadline.

Swell. Increased taxes on the middle class, and no spending cuts other than defense. 2012 cannot come fast enough.