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Mon, Jan 25, 2010 - Page 10 News List

Obama endorses US deficit task force

‘WON’T BE SOLVED OVERNIGHT’The US deficit rose to US$1.4 trillion last year and could top that figure this year as a struggling economy puts a dent in tax revenue


US President Barack Obama Saturday endorsed a bipartisan plan to name a task force charged with coming up with a plan to curb the spiraling budget deficit, though the idea has lots of opposition from both his allies and rivals on Capitol Hill.

The bipartisan 18-member panel backed by Obama would study the issue for much of the year and — if at least half of the GOP panel members agree, a big obstacle — report a deficit reduction blueprint after the November elections that would be voted on before the new Congress convenes next year.

“These deficits did not happen overnight and they won’t be solved overnight,” Obama said in a statement. “The only way to solve our long-term fiscal challenge is to solve it together — Democrats and Republicans.”

The deficit spiked to an extraordinary US$1.4 trillion last year and could top that figure this year as the struggling economy puts a big dent in tax revenues. Even worse from the perspective of economists and deficit hawks, the medium-term deficit picture is for deficits hitting about US$1 trillion a year for the foreseeable future.

The White House has signaled that it will take an aggressive approach to the deficit this year; it’s to be a major focus of Obama’s State of the Union speech on Wednesday and his Feb. 1 budget submission.

The task force plan would have to pass the Senate tomorrow, where a vote had already been scheduled. Moderate Democrats want to attach the deficit task force plan to legislation to permit the government to continue borrowing money to pay for its operations.

The so-called debt limit measure would allow the government to issue another US$1.9 trillion in bonds — enough to finance operations into next year.

The general belief is that the task force idea will fail since many Republicans oppose the plan as a recipe for tax increases, while Democrats worry it will lead to cuts to Medicare and Social Security benefits. And lots of powerful Democrats say the task force would encroach on their decision-making powers.

Still, some moderate Senate Democrats had demanded Obama’s endorsement of the deficit panel idea, refusing to commit their votes for the unpopular debt limit measure next week without it.

The task force plan was offered by the top senators on the Budget Committee, Chairman Kent Conrad and Republican Senator Judd Gregg who see it as the only way for Republicans and Democrats alike to take the leap into the treacherous business of curbing the deficit with politically unpopular tax increases and spending cuts.

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