59° Good Morning
59° Good Morning

Democrats, GOP prep for next budget fight

WASHINGTON -- Without a moment's pause from last week's budget battle, Democrats and congressional Republicans have set the stage for the next confrontations over federal spending, including the future of Medicare and Medicaid.

White House officials said President Barack Obama will present his long-term debt reduction plan Wednesday in a speech that will include his insistence that the nation cannot afford to continue tax breaks for the wealthiest Americans.

Republicans, meanwhile, plan by the end of the week to push through a House vote on their 2012 budget, which would slash domestic spending, lower upper-income tax brackets and start the process of turning Medicare into a private program.

The battle is expected to dominate Washington in the months ahead, spilling into the presidential campaigns.

"It's going to be a tough fight. How are we going to reduce the deficit, get on a more sustainable fiscal trajectory, but in a way that doesn't compromise" economic progress, White House adviser David Plouffe said yesterday on NBC's "Meet the Press."

Republicans have criticized Obama for not presenting a comprehensive debt-reduction plan when he outlined his 2012 budget this year. A detailed plan put forward by Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee, would lower the top tax rates for corporations and individuals, while fundamentally shrinking the federal role in providing health care to the poor, disabled and the next generations of seniors.

"We want to move from talking about saving billions of dollars to going on and saving trillions of dollars," Ryan said on "Meet the Press."

The national debt, now at nearly $14.3 trillion, will hit its legal limit in the weeks ahead, and Congress will be asked to grant the government additional borrowing authority.

If Congress does not act on the debt ceiling, the economic fallout would be severe, analysts have said. They predict interest rates would spike, affecting mortgages, consumer credit and business lending.

Taking a political gamble, Republicans are preparing to try to extract new budget restraints from the White House in exchange for their votes to raise the debt limit. They may fight for statutory spending caps or a balanced-budget amendment.

Congress is set to vote next week on $38 billion in budget cuts under Friday's agreement between congressional leaders and the White House to avert a government shutdown and keep the money flowing for the rest of the 2011 fiscal year, which ends Sept. 30. Details of the cuts, perhaps the largest spending reduction package in history, were being prepared in advance of today's filing of the legislation.

News Photos and Videos