Tags: obama | gop | budget | battle

Obama, GOP Set for Battle Over Budget, Spending

Saturday, 29 Jan 2011 02:08 PM

Jan. 29 (Bloomberg) -- President Barack Obama will send a multitrillion budget to Congress on Feb. 14, administration spokesman Kenneth Baer said, setting up a conflict over spending that may dominate a divided Congress for the rest of the year.

The budget for fiscal 2012 is a political document that will put into precise language the administration’s priorities for increasing economic growth and creating jobs. Republicans who campaigned on promises to slash spending took control of the U.S. House of Representatives and reduced the Democrats’ majority in the Senate.

“The sooner Washington ends its dependence on more spending, the sooner our economy will see real growth,” Senator Ron Johnson of Wisconsin said in Saturday’s weekly Republican radio address.

Obama says he’s ready to trim or eliminate programs, specifically mentioning community action grants to local governments, to allow spending increases for his priorities.

“We want to cut with a scalpel as opposed to a chain saw,” Obama said in an interview broadcast online by Google Inc.’s YouTube on Jan. 27. “Frankly, we’re just going to have to trim some of these programs.”

The nonpartisan Congressional Budget Office said Jan. 26 that U.S. budget deficit will widen this year to a record $1.5 trillion, partly because of the $858 billion tax-cut measure passed last month by Congress.

‘Daunting’ Challenges

“The U.S. faces daunting economic and budgetary challenges,” the report said.

In his Jan. 25 State of the Union address, the president proposed a five-year freeze on all annual appropriations for a savings of about $400 billion over a decade. It wouldn’t apply to defense, Medicare, Medicaid, Social Security and interest in the national debt.

As a result, the freeze would apply to 18 percent of the budget, or $663 billion, in the current 2011 fiscal year, the CBO said in an economic outlook published Jan. 26.

Republicans, and some Democrats, say the freeze doesn’t go far enough and are demanding big spending cuts as part of any deal to raise the nation’s $14.3 trillion debt ceiling, which may be reached as early as March.

“We’re going to have to deal with the entitlements of Social Security, Medicare; we’re going to have to deal with the tax expenditures,” Senator Kent Conrad, the Democratic chairman of the Budget Committee, said on CNBC on Jan. 26.

Opening Offer

It’s “an opening offer in a very tough negotiation” to reduce the deficit, Alice Rivlin, former Federal Reserve vice chairman, said on the same program.

The budget will also provide the administration’s latest forecasts for economic growth, inflation and unemployment rate this year and next.

Obama will also provide details of proposals he highlighted in the State of the Union message, including the repair of roads, bridges and mass-transit systems and creation of an infrastructure bank to help pay for them.

He would add 100,000 teachers of science, engineering and mathematics within 10 years; make permanent a $10,000 tuition tax credit; replace education’s No Child Left Behind Law; increase research and development spending; provide high-speed wireless access to 98 percent of Americans in five years; abolish tax breaks for oil, gas and coal producers; and put 1 million advanced-technology vehicles on roads by 2015.

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