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News Analysis: Stage set for U.S. budget battle

02-16-2011 07:32 BJT

by Matthew Rusling

WASHINGTON, Feb. 14 (Xinhua) -- U.S. President Barack Obama on Monday outlined his budget proposal for fiscal 2012, setting the stage for what experts say will be a knockdown fight over spending and cost cutting.

"There is going to be a royal battle between the parties on the federal government budget," said Darrell M. West, vice president and director of governance studies at the Brookings Institution.

The Republican Party and the Democrats led by Obama view the role of government in a wholly different light and reconciling those visions will be difficult, West said.

"There is room for a compromise, but neither side appears in a mood for that," he said. "We probably will walk up to the precipice of a government shutdown before something happens."

The budget's release comes not long after the November mid-term elections, when Republicans took the House and split Congress more evenly.

Another dynamic also took hold: many moderates in each party were voted out, creating a more polarized Congress and increasing the likelihood of a bitter partisan clash.

The budget could well become the first showdown since the mid-term elections, some experts say.

Obama, however, trumpeted the new budget on Monday, arguing it makes significant cuts in spending that will put the country on a less fiscally lopsided path.

"When I was sworn in as president, I pledged to cut the deficit in half by the end of my first term. The budget I am proposing today meets that pledge," Obama said. "It puts us on a path to pay for what we spend by the middle of the decade."

The president called for a freeze on domestic discretionary spending over the next five years, which he argued would cut the deficit by more than 400 billion U.S. dollars over the next decade.

He said the freeze would bring domestic discretionary spending to its lowest share since Dwight Eisenhower was president from 1953 to 1961.

Republicans, however, argued the proposal makes up just a fraction of the 14.1-trillion-dollar debt and are proposing much deeper cuts.

Under pressure from newly elected tea party members, House Republicans said last week they wanted to strip $100 billion from the remaining fiscal year. After that they are expected to draft a budget proposal for 2012.

"The president has very good words to say but the plan does not match what he...says he is going to cut," said Kevin McCarthy, R-Calif., the Majority whip. "He freezes discretionary spending when he's increased it by 84 percent."

Other Republicans also expressed disappointment over the budget, with some contending that it is detached from reality.

Brian Riedl, lead budget analyst at the Heritage Foundation, said "it's more spending, more massive deficits, more taxes."

Under the president's budget, the United States will double the national debt over the next decade, he said.

In spite of Obama's support, the bill is unlikely to gain Republican backing. As Republican lawmakers sound off daily about cutting the deficit, Obama's plan could be dead on arrival, Riedl said.

OBAMA ARGUES TOO DEEP IS DANGEROUS

The president has in recent weeks argued that if cuts are too ambitious, than that could damage the recovery from the worst recession in eight decades.

Those sentiments echo the arguments of some economists, who maintain that making too many cuts too rapidly could stunt recovery. Others, however, argue that the deficit is a pressing problem that must be dealt with before it spirals out of control.

Obama's budget proposal includes investments in infrastructure and education that he said would spur competitiveness and boost economic growth.

The move mirrors what some business leaders are saying, including U.S. Chamber of Commerce President Tom Donohue, who contends the economy needs at least some new investments to create jobs.

Still, some observers noted neither party has addressed the 800-pound gorilla in the room: as the budget battle between Democrats and Republicans commences, neither side has put together a detailed plan to tackle the domestic entitlement programs - Medicare, Medicaid and Social Security - that many experts say are driving up the deficit.

The president's budget does, however, strip funds from the military, providing more than 10 percent less than what the Pentagon had requested for this year.

BUDGET IS STARTING POINT

Jack Lew, director of the Office of Management and Budget, suggested at a White House press briefing on Monday that Obama might be open to compromise if the right middle point is found.

"I think that it's fair to say that every side begins with its deeply held views," he said. "We have our deeply held views; they have their deeply held views."

"I think that we've put down a reasonable plan, a comprehensive plan. And we understand that's the beginning of the process," he said. "But I think that we have to work together, work frankly, in the interests of the American people to reach agreements where we can agree."

John Fortier, fellow at the American Enterprise Institute, said any budget the president proposes is just the starting point of negotiations with Republicans.

But while Obama moved closer to Republicans on a tax extension agreement reached in December, his budget proposal has pushed him closer to his Democratic base, Fortier said.

The president and House Republicans might at the end of a standoff agree on some sort of compromise on discretionary spending.

But realistically, the two parties won't agree on what to do about health-care spending, which comprises the bulk of the long-term deficit problem, he argued.

They may agree on some modest fixes to social security, however.

"That sort of compromise still would not be enough to get us out of deep fiscal problems, but it would make a good start in that direction," he said.

 

 

 

Editor:Zhang Pengfei |Source: Xinhua

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