Saturday, November 26, 2011
U.S. spending-cuts panel draws a blank
When the approval rating of an institution is at an all-time low of nine per cent, one would think it would go out of its way to avoid any glaring failure in carrying out its duty.
Yet, even after the reputational debacle that the U.S.Congress suffered over the summer owing to its near-failure to reach a deal on a limit for the ballooning debt, it has again endangered its credibility in the eyes of voters.
In the months following those precipitous negotiations over the debt limit, the Congress' so-called deficit-reduction “supercommittee” failed to hammer out a deal on further public spending cuts before its Monday midnight deadline.
While rating agencies are closely watching these developments, the U.S. may have temporarily escaped an S&P-style downgrade since President Barack Obama's plan, approved by Congress, will now require automatic cuts across vast swathes of the budget, including the Republican-cherished area of defence expenditure.
Though $1.2 trillion in additional cuts was at stake, the committee could not reach a bipartisan consensus on where these cuts would be applied, with Republican intransigence on the continuation of the Bush-era tax cuts for millionaires and billionaires forming the bulwark of their opposition.
Democrats refused to sign off on deep cuts into Medicare, Medicaid and Social Security, welfare programmes aimed at the most vulnerable members of society.
With an unmistakable tenor of shame, the supercommittee co-chairs, Democratic Senator Patty Murray and Republican Congressman Jeb Hensarling, said in a statement, “After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline.”
Mr. Obama, who may well mould the Republican blockades into a campaign plank for the presidential elections, struck a defiant note scarcely an hour after the passage of the deadline.
Broad agreement
“Despite the broad agreement that exists for such an approach, there's still too many Republicans in Congress who have refused to listen to the voices of reason and compromise that are coming from outside of Washington. They continue to insist on protecting $100 billion worth of tax cuts for the wealthiest two per cent of Americans at any cost, even if it means reducing the deficit with deep cuts to things like education and medical research,” said Mr. Obama.
Further warning his opposition against efforts to undermine the automatic cuts, which are expected to kick in by early 2013, he said, “My message to them is simple: No. I will veto any effort to get rid of those automatic spending cuts to domestic and defence spending,” adding, “There will be no easy off ramps on this one.”
Labels: austerity measures, U.S. debt crisis, U.S. economy, U.S. spending cuts
Tuesday, May 31, 2011
Obama outlines deep cuts across budget
From The Hindu
It was a speech that did everything. It would anger Republicans; it would anger Democrats. It would sharpen the philosophical differences across the two parties; it would seek to strike a compromise between them. And more than anything it was another complex Obama-style answer to a looming national issue while at the same time being a powerful display of leadership by the United States President.
Speaking at a packed auditorium at George Washington University on Wednesday, U.S. President Barack Obama finally waded into the fierce debates over cutting the dangerous, $14-trillion deficit. In explaining his solution to the brewing fiscal crisis, he also laid out a vision for America that differed sharply from what he described as the “deeply pessimistic” vision of the Republican Party.
Proposing radical cuts across the budget and also savings through lower interest payments and lower subsidies, Mr. Obama said his approach would achieve $2 trillion in spending cuts across the budget, reduce interest payments on the debt by $1 trillion and call for tax code reform to the order of $1 trillion less in tax expenditures.
His plan would achieve these goals “while protecting the middle class, protecting our commitment to seniors, and protecting our investments in the future.”
Mr. Obama argued that his opponents' budget proposal “paints a vision of our future... that says if our roads crumble and our bridges collapse, we cannot afford to fix them. If there are bright young Americans who have the drive and the will but not the money to go to college, we cannot afford to send them.”
Mr. Obama's plan for budget austerity was lauded in some quarters, notably by liberal economists such as Paul Krugman, for seeking to make cuts to the defence budget and for refusing to further extend Bush-era tax cuts for the wealthiest Americans. Overall, the President argued that his plan would cut over $4 trillion over the next 12 years, still significantly less than the $6.2 trillion that the Republican proposals demanded.
However, as Mr. Obama himself admitted, his proposals would face resistance even within the Democratic Party, as he had pressed for cuts to mandatory programmes such as Medicare, Medicaid and Social Security.
He said these three policies alone accounted for two-thirds of spending, and so avoiding a cut to these was impossible.
Addressing concerns about cutting spending on these policies, he said “I guarantee that if we do not make any changes [to these three policies] at all, we will not be able to keep our commitment to a retiring generation that will live longer and will face higher health care costs than those who came before.”
It was a speech that did everything. It would anger Republicans; it would anger Democrats. It would sharpen the philosophical differences across the two parties; it would seek to strike a compromise between them. And more than anything it was another complex Obama-style answer to a looming national issue while at the same time being a powerful display of leadership by the United States President.
Speaking at a packed auditorium at George Washington University on Wednesday, U.S. President Barack Obama finally waded into the fierce debates over cutting the dangerous, $14-trillion deficit. In explaining his solution to the brewing fiscal crisis, he also laid out a vision for America that differed sharply from what he described as the “deeply pessimistic” vision of the Republican Party.
Proposing radical cuts across the budget and also savings through lower interest payments and lower subsidies, Mr. Obama said his approach would achieve $2 trillion in spending cuts across the budget, reduce interest payments on the debt by $1 trillion and call for tax code reform to the order of $1 trillion less in tax expenditures.
His plan would achieve these goals “while protecting the middle class, protecting our commitment to seniors, and protecting our investments in the future.”
Mr. Obama argued that his opponents' budget proposal “paints a vision of our future... that says if our roads crumble and our bridges collapse, we cannot afford to fix them. If there are bright young Americans who have the drive and the will but not the money to go to college, we cannot afford to send them.”
Mr. Obama's plan for budget austerity was lauded in some quarters, notably by liberal economists such as Paul Krugman, for seeking to make cuts to the defence budget and for refusing to further extend Bush-era tax cuts for the wealthiest Americans. Overall, the President argued that his plan would cut over $4 trillion over the next 12 years, still significantly less than the $6.2 trillion that the Republican proposals demanded.
However, as Mr. Obama himself admitted, his proposals would face resistance even within the Democratic Party, as he had pressed for cuts to mandatory programmes such as Medicare, Medicaid and Social Security.
He said these three policies alone accounted for two-thirds of spending, and so avoiding a cut to these was impossible.
Addressing concerns about cutting spending on these policies, he said “I guarantee that if we do not make any changes [to these three policies] at all, we will not be able to keep our commitment to a retiring generation that will live longer and will face higher health care costs than those who came before.”
Labels: Barack Obama, U.S. spending cuts
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