Despite deal, US budget woes far from over

The next fiscal showdown is likely to be over the US’s debt ceiling © AFP/File image Shawn Thew

AFP

WASHINGTON (AFP) – The last-minute budget agreement that Republicans and Democrats reached may have averted a Saturday US government shutdown, but it’s a mere skirmish in a looming war over the debt ceiling and the 2012 federal budget.

The agreement, reached after weeks of hard bargaining just before midnight Friday, funds the government for the rest of the fiscal year ending September 30, while making what President Barack Obama described as the deepest annual spending cuts in US history.

“This is not basically the last fight here,” Republican Representative Adam Kinzinger told Fox News, some 12 hours after the 11th-hour vote. “This is the first opening salvo in a real attempt to bring back the size of government and start living within our means.”

Disagreements over funding between Republicans and Obama’s Democrats reflect core philosophical differences which the two sides have over the role and scope of government.

For many Republicans, especially those aligned with the conservative Tea Party movement, the government’s role should be minimal. Private industry must be allowed to invest with few restrictions and taxes slashed to stimulate job growth, they say.

Democrats in turn want to increase taxes on the wealthiest Americans, favor government spending to promote job growth, and support entitlement programs like social security and health care that Republicans believe would work more efficiently if privatized.

Obama must deal with a Republican-controlled House of Representatives, and a Senate in which his Democrats hold a narrow majority.

The next showdown is likely to be over the country’s debt ceiling, which will be reached in mid-May. Obama must ask Congress to increase the amount of money the country can borrow beyond the $14.294 trillion authorized, or the government risks defaulting on its debt.

“It’s no secret our government has a spending problem,” said Republican Congressman Paul Ryan, chairman of the House Budget Committee.

This is so serious it is “threatening our future and hurting our nation’s ability to create jobs,” said Ryan, speaking Saturday in a Republican response to Obama’s weekly broadcast message.

Ryan is author of a Republican budget proposal that slashes a whopping $6.2 trillion from the budget over the next decade.

That plan calls for tax cuts for corporations and wealthy Americans, and slashes health care spending and spending on health insurance programs for the elderly (Medicare) and for the poor (Medicaid).

Democrats charge that the Republicans want to shrink the debt by cutting programs they have long opposed, like the Environmental Protection Agency (EPA), Planned Parenthood woman’s health centers — which also provide abortions — and public support for the arts.

Paul Krugman, winner of the 2008 Nobel Prize in economics, dismissed Ryan’s budget proposal in his influential New York Times column as “simultaneously ridiculous and heartless.”

Krugman disputes Ryan’s claims, including that lower taxes would result in an economic boom and higher revenue.

The Republican budget plan “isn’t a good-faith effort to put America’s fiscal house in order; it’s voodoo economics, with an extra dose of fantasy, and a large helping of mean-spiritedness,” wrote Krugman.

The Republicans “announced next week they’re going to force a vote on a bill to privatize Medicare and end the guaranteed Medicaid for senior,” said Democratic Representative Steve Israel, speaking on CNN.

“We have a long way to go on profound and fundamental issues facing the American people,” he said.

The late Friday deal “was not even act one,” Israel said. “This was just the overture.”

Mike Huckabee, a likely Republican presidential hopeful in 2012, strongly supports Ryan’s budget proposal, and also praised House Speaker John Boehner for getting the deal that he did — $38.5 billion in spending cuts for the remainder of the fiscal year — in order to move on to bigger budget battles.

“Talk about the trillions of dollars” in cuts, he told Fox News. “Do not lose the big picture for the little picture.”

However ex-president Bill Clinton’s labor secretary, Robert Reich, was unhappy with the late deal and predicted further Democratic retreats.

“The right held the US govt hostage, and O (Obama) paid most of the ransom — inviting more hostage-taking. Next is raising debt ceiling,” he wrote in a Twitter message.

© AFP — Published at Activist Post with license