Sat, Mar 05, 2011 - Page 7 News List

Republicans, Biden meet on US budget

SPENDING CUTS:The Obama administration has proposed US$6.5 billion in cuts, but John Boehner said Obama had failed by not overhauling Medicare and Social Security

Reuters, WASHINGTON

US Vice President Joe Biden held budget talks with US congressional leaders on Thursday as Republicans came under pressure to scale back their plan to slash domestic spending by 25 percent.

US President Barack Obama and his fellow Democrats are at odds with Republicans over how to shrink the budget deficit, which is due to reach a record US$1.65 trillion this year, and keep the federal government running through September.

A temporary funding bill expires on March 18.

“We had a good meeting, and the conversation will continue,” Biden said in a statement after the closed-door, one-hour talk on Capitol Hill with top Republican and Democratic leaders.

Republicans propose cutting spending by US$61 billion through September, but Obama, many Americans and a financial titan highly respected on Wall Street say that is too much.

Biden, who helped negotiate a tax-cut deal with Congress in December, met with leaders including Republican House of Representatives Speaker John Boehner and Democratic Senate Majority Leader Harry Reid.

“We are willing to cut spending further if we can find common ground,” White House National Economic Council Director Gene Sperling said.

A source at the meeting said Obama administration officials outlined a host of specific programs that could be cut to reach US$6.5 billion in cuts from current levels.

The cuts range from US$950 million in funds for states for clean water and drinking water projects; US$100 million from a biomass crop assistance program; and US$280 million related to a canceled train tunnel between New Jersey and New York.

A top official at the world’s biggest bond fund manager called for measured austerity measures to avoid harming the economy.

“Let’s cut the deficit, but let’s do it gradually,” said Bill Gross, PIMCO’s co-chief investment officer. PIMCO is the world’s biggest bond fund manager.

In an interview with the Wall Street Journal, Boehner said House Republicans would offer a budget for the next fiscal year that sets goals for bringing under control the costs of the Social Security retirement program and the Medicare health insurance program for the elderly and disabled.

Boehner told the Journal that he told Obama he would work with the president to rein in spending on the huge entitlement programs.

Boehner criticized Obama for not proposing a plan to overhaul the programs, telling the Journal: “I think the president shrank from his responsibility to lead. He knows the numbers as well as we do.”

Republicans showed little willingness to soften their proposals for spending cuts.

“I don’t think compromise right now is the option,” said Representative Scott DesJarlais, one of the 85 first-term House Republicans elected last fall on the strength of a conservative groundswell. “We were sent here to cut spending.”

Congress avoided a government shutdown by approving a short-term spending bill this week, but major disagreements remain. Both parties acknowledge the need this year to cut the deficit, projected to equal 10.9 percent of the economy.

However, Democrats argue that reducing government spending too much would hurt the shaky economic recovery and result in hundreds of thousands of job losses at a time when unemployment stands at 9 percent.

Democrats who control the Senate are preparing a measure that would keep funding essentially flat.

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