US Spending Battle Looms over Obama Speech

WASHINGTON - Democrats and Republicans are gearing up for a clash over what is likely to be a central theme of President Barack Obama's address to Congress on Tuesday: deficit reduction and spending cuts.

Obama, a Democrat, is scheduled to make his State of the Union address at 9 p.m. on Tuesday, and the White House has signaled the president will focus his time primarily on the economy and U.S. fiscal woes.

Reining in U.S. spending is likely to be part of that equation, amid high anxiety among voters over a budget deficit of $1.3 trillion and rising federal debt, expected to hit its statutory limit of $14.3 trillion by March 31. But both parties disagree on the best path to reach that goal.

"He is going to deal with the deficit, but the key is, is he going to be able to distinguish a Democratic approach and what the Republicans would do," said Julian Zelizer, a historian and public policy expert at Princeton University.

Republicans have called for $100 billion in cuts. Democrats fear large cuts in domestic spending could stifle the still-fragile economic recovery and jeopardize hopes of reducing the 9.4 percent unemployment rate.

With at least 14.5 million Americans out of work, curbing the jobless rate is vital to Obama's 2012 re-election hopes.

The debate on spending, which has played out in recent days, continued ahead of Obama's speech. U.S. Senator Jeff Sessions, a Republican from Alabama, expressed skepticism on Monday that Obama would get serious about reducing spending.

FISCAL SANITY

"He's got to get on the road to fiscal sanity, and I'm not sure we're going to hear that," Sessions said in an interview with Reuters Insider.

"Business as usual cannot be continued. And I am just terribly afraid the president (hasn't) got it, that he's in denial. He's talking about investments, still, which are spending programs. And I'm really worried about that."

Obama plans to emphasize the need for U.S. global competitiveness in the speech and views investment in education and infrastructure as crucial to that effort.

White House spokesman Robert Gibbs said both political parties agreed the issue of spending cuts needed to be addressed.

"We're not going to have a debate in Washington about whether we need to make some changes and whether we need to control our spending," he told reporters.

"We're going to have, hopefully, a bipartisan discussion and work together on how we go about doing that."

Gibbs declined to say if Obama would outline a vision for deficit reduction measures, or whether he would now endorse specific proposals from the bipartisan deficit commission that made a series of controversial recommendations last year.

Gibbs said the speech would not get bogged down in heavy policy details or read like a "laundry list" of issues, as have some State of the Union addresses in the past.

"I don't think this is intended to be a speech ... where you spend big chunks of time walking through the specific machinations of policy," Gibbs said.