US Congress, Obama face new budget fights

fights lie ahead for President Barack Obama and leaders from both parties in the US Congress.
Obama will offer a long-term plan for deficit reduction tomorrow as the White House and Congress begin to pivot to looming fights on the 2012 fiscal year budget and on raising the US$14,3 trillion limit on government borrowing authority.
Those conflicts are likely to dominate the political agenda for the coming months and echo into Obama’s 2012 re-election race, overshadowing last Friday’s 11th-hour deal to cut US$38 billion in spending for the final six months of this fiscal year.
“The spending deal that was cut this week is only the beginning. This is the first bite of the apple,” said Representative Eric Cantor, the No. 2 Republican in the US House of Representatives.
Republicans, who made big gains in November’s election with promises to cut spending and rein in government, are sceptical of Obama’s sincerity on deficit reduction.
“For the last two months we have had to bring this president kicking and screaming to the table to cut spending,” Cantor said on Fox News.
“In my opinion, it is really hard to believe what this White House and the president is saying.”
Senior White House adviser David Plouffe said Obama’s plan will explore savings in defence spending and the government-run Medicare and Medicaid health programmes for the elderly and poor in an effort to reduce the US$1,4 trillion annual deficit.
The plan also will revisit the issue of tax increases for the wealthy and spell out specific deficit-reduction targets and a timeline, he said.
“He is going to be clear about the type of deficit reduction we need in terms of dollar amounts, over what period of years,” Plouffe told CNN.
The unveiling of Obama’s plan follows a deal on spending cuts for the rest of this fiscal year struck with barely an hour to spare before Friday’s midnight deadline.
It stopped a shutdown the White House feared would hinder the economic recovery and idle more than 800 000 federal workers.
The Senate and House are expected to approve that agreement this week, although lawmakers on both sides of the political aisle have criticised it.
Fiscal conservatives aligned with the Tea Party pressured House Speaker John Boehner for even deeper cuts, while liberal Democrats fear the cuts will hurt social programmes for Americans dealing with the lingering effects of a recession.
Later in the week, the House takes up the Republican 2012 budget plan proposed by Representative Paul Ryan, head of the House Budget Committee.
His plan would save US$6 trillion over the next decade partly by cutting Medicare and Medicaid.
“The president is not going to support a lot of what is in that plan,” Plouffe said on NBC. “It may pass the House. It is not going to become law.”
Republicans and Democrats also expect another tough political fight in the next few months over raising the debt ceiling.
Administration officials warn a failure to raise the debt limit could put the United States into a debt default that would risk global economic havoc, but Republicans said it must be accompanied by budget reforms or spending caps. – Reuters.