US President Barack Obama yesterday sought to wrest control of Washington’s fevered debate over the economy and bulging deficit, sure to be a dominant theme of his reelection bid next year.
The White House said the president would lay out his vision for constraining the fiscal gap, as fresh political battles over spending escalate less than a week after the dramatic climax to the budget fight.
Advance details about Obama’s speech at the capital’s George Washington University are sketchy.
However, aides hint at some reform of costly health programs like Medicare for the elderly, tax hikes for the wealthy and a trimming of the trillions spent on the military — all recipes for a pitched political conflict.
Cuts will be with a “scalpel and not a machete,” they say, seeking to safeguard Obama’s core aspirations for education and energy reform, and portraying the slashing approach of conservative Republicans as extreme.
Republicans meanwhile are challenging the president with new boldness, after claiming what many commentators scored as a victory in securing US$39 billion in new spending cuts in a last-gasp deal averting a government shutdown last week.
“The buzz continues to build about the president’s much anticipated ‘budget do-over’ speech,” said Eric Cantor, the No. 2 Republican in the House of Representatives. “He will outline his plan to hike taxes on families and business owners in order to get a grasp on our deficit and debt crisis.”
Republicans frequently use painful US debt figures — a projected annual deficit of US$1.6 trillion this year and a cumulative public debt of US$14.27 trillion as a political weapon.
However, Democrats hit back that the last Democratic president, former US president Bill Clinton bequeathed budget surpluses to former US president George W. Bush, who they say ran up debt with tax cuts for the rich and wars that were not paid for.
The president’s political goals yesterday seemed two-fold: to seek leverage in a short-term row in extending the US debt ceiling, and to define the coming campaign debate over spending.
The White House is already warning of a financial “Armageddon” should Congress fail to raise the US borrowing limit from the US$14.29 trillion it is set to exceed in May.
Republican leaders, aware of the likely severe crisis of confidence and possible recessionary results of a failure to act say the ceiling will be raised — but are seeking new budget cuts in return.
The White House says the issues of the debt ceiling and constraining the runaway deficit are separate, and that Republicans should not “play chicken” with the economy.
However, Obama’s decision to give a speech on deficit cutting is seen as an indirect acknowledgement of Republican demands.
In the long-term, Obama’s speech will help define the dominant economy and jobs debate heading into next year’s re--election battle, amid a palpable feeling among many Americans that the country needs to tighten its belt.
Republicans have swung their first punch with a plan by US -Congressman Paul Ryan to slash government spending by US$6 trillion over the next decade.
The plan calls for reform and spending curbs on health and retirement programs for the poor and the elderly, but would also cut tax rates faced by corporations and the wealthiest Americans in a bid to unleash growth.
Obama has made it known that he finds the plan unfair.
“It places all the burden on the middle class, on seniors, on the disabled, on people in nursing homes, through its rather drastic reform” of health programs for the poor and the elderly, White House spokesman Jay Carney said.
Obama may indirectly respond to Ryan’s gambit by going some way to embracing a rival plan being formulated by a bi-partisan group of six senators with similar goals, but a less stark approach.
However, his top Republican foe, House Speaker John Boehner, declared on Tuesday that Ryan “has set the bar,” hinting at the intensity of the fight to come.
“If the president begins the discussion by saying we must increase taxes on the American people ... my response will be clear: Tax increases are unacceptable and are a nonstarter,” he said.
Obama has solid political reasons for seeking to dominate the budget debate.
A Gallup poll taken in February put his approval rating for tackling the deficit at only 27 percent.
Even more importantly, among critical independents who rallied to his banner in 2008, but who deserted Democrats last year in mid-term elections, his rating on the deficit issue was a lowly 19 percent.
However, as he courts vital independent voters, Obama must at least keep one eye on his own core Democratic coalition, parts of which appear to believe he is already conceding too much to Republicans.
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