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Obama budget to kick off US battle on spending

world Updated: Feb 14, 2011 17:28 IST
Reuters
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President Barack Obama will offer a 2012 budget plan on Monday that aims to slash $1.1 trillion from the US deficit over 10 years, launching a fight on fiscal priorities with Republicans who want even deeper spending cuts.

Obama's budget plan includes a range of domestic spending reductions -- including community development, home heating and education programs -- that would put the government on track to halve the federal budget deficit by the end of Obama's first term in office, White House budget director Jack Lew said.

"There are scores of programs that are being reduced, and I think it's important to note that we're beyond the easy, low-hanging fruit," Lew said on CNN on Sunday.

But Republicans, who control the House of Representatives, said Obama's proposed spending cuts would not do enough to rein in the growing federal deficit and promised their own plan -- which has not been unveiled yet -- would go further.

"He's going to present a budget tomorrow that will continue to destroy jobs by spending too much, borrowing too much and taxing too much," House of Representatives Speaker John Boehner said on NBC's "Meet the Press."

The budget proposal by Obama, a Democrat, is the opening salvo in what is certain to be a contentious policy debate with Republicans, whose big gains in November's elections were fueled by conservative Tea Party activists who wanted to slash spending and reduce the size of government.

The budget is to be formally released at 10:30 a.m. EST (1530 GMT).

The deficit is forecast to reach $1.48 trillion this fiscal year, or 9.8 percent of US GDP. This would be down from 10.0 percent of GDP in 2010, but still high for the United States on a historical basis.

The 2012 fiscal year begins on Oct. 1.

LACK OF 'SPENDING DISCIPLINE'

The White House intends to get two-thirds of the $1.1 trillion in savings from spending cuts and one-third from tax revenues, including closing several tax loopholes, according to sources familiar with the budget.

Republican House Budget Committee chairman Paul Ryan would not say whether Republicans would oppose Obama's plan until he saw the full text.

"We'll see the details of this budget tomorrow, but it looks like to me that it is going to be very small on spending discipline and a lot of new spending so-called investments," Ryan said on "Fox News Sunday."

The two parties have clashed over the level of spending cuts needed to trim the deficit and also bolster the economic recovery, and are on a collision course ahead of the March 4 expiration of a temporary government funding measure.

Boehner refused to rule out the possibility of a government shutdown when that stopgap measure runs out. "Our goal is to reduce spending, it is not to shut down the government," he said.

Democrats criticized Boehner for keeping alive the threat of a shutdown. "He should completely take a shutdown off the table and tell other Republicans to stop with the threats," said Senate Democratic Leader Harry Reid.

The White House hopes to keep the debate over the stop-gap funding measure and Obama's 2012 budget plan separate from a bill to raise the $14.3 trillion debt ceiling, which will be taken up by Congress in April or May.

Some Republicans oppose raising the debt ceiling without deeper budget cuts, but rejection of the increase could put the United States at risk of falling into a debt default that could cause economic havoc globally.

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