Barack Obama will this week propose cuts in health care provision for the elderly and the poor as he seeks to reach agreement with Republicans on bringing America’s record levels of debt under control.
President Obama poses for photographers in the Blue Room at the White House in Washington after averting government shutdown after a deal was made between Republican and Democrat lawmakers. Photo: AP Photo/Charles Dharapak
Aides said that in a major speech on Wednesday the US president will lay out plans that will include reform of Medicare and Medicaid, the major subsidised health care schemes that are among the main causes of the country’s $14.25 trillion (£8.7 trillion) national debt.
“The president will be laying out his approach to long-term deficit reduction,” said David Plouffe, a senior adviser at the White House, adding that the president would call on both sides to compromise.
“If we are going to make progress the parties are going to have to come together to find common ground,” he said.
Mr Obama was last week forced into accepting $38.5 billion (£23.5 billion) in cuts demanded by Republicans for other types of spending in order to secure a last minute deal to keep the government running for the rest of the financial year.
Though the president and his aides have tried to present the aversion of a shutdown as proof of his abilities as a bridge-builder, the row is seen in Washington as a success for the new Republican majority in the House of Representatives and its supporters in the Tea Party, which advocates tight controls on spending.
Robert Reich, formerly labour secretary under Bill Clinton, said that the president had “caved in”, securing a “tactical win but a strategic loss”.
Mr Obama’s forthcoming speech is recognition that he needs to gain the initiative on spending, amid deep public concern about the viability of the US economy. Having launched his 2012 re-election campaign, he needs to produce a plan that will convince voters that deficits will be brought under control.
The Republicans have already taken the lead on the issue, with Representative Paul Ryan, the chairman of the House budget committee, releasing a 2012 budget plan that included major cuts to Medicare, which provides for the retired, and Medicaid, which offers help for the poor.
Mr Obama’s ideas will be nothing like as radical, said Mr Plouffe, and he is likely to call for the restoration of tax rises for the rich and further cuts in defence expenditure.
The battle in recent weeks over this year’s budget is only the first of several larger debates over spending. The next is due to be over raising the country’s debt ceiling so it can continue to pay its creditors.
That ceiling will be reached in mid-May, and Republicans in Congress are promising to demand another round of cuts before they agree to raise it.
Representative Jeb Hensarling of Texas, said: “We don’t want America to default on its debt, but the president is going to have to work with us to cut up the credit cards and put the nation on a fiscally sustainable path.”
By Alex Spillius, Washington 5:45PM BST 10 Apr 2011
Source: The Telegraph