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Obama Outlines Ambitious Budget Plan

Updated from 3:04 p.m. EDT with additional plan details.

NEW YORK ( TheStreet) -- President Barack Obama outlined his own plan to reduce the nation's deficit by $4 trillion over the next 12 years on Wednesday, while criticizing the path proposed by Republican House Budget Committee Chairman Paul Ryan last week.

"Now that our economic recovery is gaining strength," Obama said in his address at George Washington University, "Democrats and Republicans must come together and restore the fiscal responsibility that served us so well in the 1990s."

Obama outlines his fiscal policy.

Obama's fiscal policy plan includes reducing wasteful spending, lowering outlays for Medicare and Medicaid, increasing taxes on the wealthy and cutting defense costs.

The president's budget seeks to strike a balance between spending cuts and tax reform, "with three dollars of spending cuts and interest savings for every one dollar from tax reform that contributes to deficit reduction," according to a fact sheet sent out by the White House.

The White House plans to reduce wasteful subsidies by cutting spending on prescription drugs and demanding "more efficiency and accountability from Medicaid," Obama said. He is looking to lower drug premiums for beneficiaries without shifting the burden of costs to seniors or privatizing Medicare.

However he also vowed to preserve the health care programs.

"We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations," the president said.

Obama is calling for individual tax reform to produce a simpler, fairer system. He is also seeking to implement changes that would "ask more of those who can afford it while protecting the middle class and promoting economic growth," the White House fact sheet states.

The president offered what he referred to as a debt failsafe, that will trigger necessary widespread spending reductions consistent with prior fiscal enforcement triggers put in place by preceding leaders.

"If, by 2014, our debt is not projected to fall as a share of the economy -- or if Congress has failed to act -- my plan will require us to come together and make up the additional savings with more spending cuts and more spending reductions in the tax code."

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