Tue, Feb 15, 2011 - Page 7 News List

Ideological fight looms over budget

CUT HERE, SPEND THERE:A US Congress energized by the Tea Party is likely to give a migraine to the Obama administration as it seeks approval for next year’s budget


The ideological battle over how the government spends US taxpayer money came into even sharper focus yesterday ahead of the release of US President Barack Obama’s budget plan for the next fiscal year, an outline for taxing and spending that Republicans say does far too little to reduce the nation’s spiraling debt.

White House budget writers contend the US$3.5 trillion-plus spending outline for the year beginning on Oct. 1 puts the US on course to reduce projected deficits by about US$1.1 trillion over the coming 10 years.

Resurgent Republicans, spurred by new low-tax, small-government tea party members in the House of Representatives, are sharpening their pencils, meanwhile, on cuts of US$100 billion in the current fiscal year that ends on Sept. 30.

Regardless of the outcome — which at this point is an argument over spending priorities now as against outlays in the coming fiscal year — neither Republicans nor Obama’s Democrats have had the courage to take on an overhaul of the tax code or reductions in defense and domestic spending or Medicare and Social Security, programs that are a social safety net for older Americans.

That spending consumes roughly 80 percent of the total annual government outlay.

Obama’s budget reveals no willingness to take the first step in the far-reaching deficit-reduction plan written in December by his fiscal commission. It recommended specific cuts to those politically sacrosanct programs and tax changes that effectively would raise government revenues. The commission plan outlined savings of US$4 trillion over a decade.

As a matter of perspective, this year’s budget deficit is forecast to hit US$1.5 trillion, the highest on record. Overall US government indebtedness is now US$14.1 trillion.

Before releasing next year’s spending plan, Obama had already promised to freeze the budgets of agencies that oversee domestic programs at last year’s levels and freeze federal salaries. That would normally be seen as an extremely austere measure, but it falls far short of attempts by Tea Party-backed House Republicans to slash tens of billions of dollars in such programs, returning them to levels when Obama took office two years ago. The Republicans say Obama’s freeze plan leaves in place a generous 24 percent increase in public benefits awarded by Democrats over the past two years.

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