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News Analysis: Obama decries spending cuts, offers no long-term plan


09:57, February 20, 2013

WASHINGTON, Feb. 19 (Xinhua) -- Back from his weekend Florida golf getaway, U.S. President Barack Obama on Tuesday sounded an alarm on harms to be caused by the looming government spending cuts, but offered no concrete and long-term plan to put U.S. fiscal house in order.


At a White House press conference, Obama decried the automatic government spending cuts slated to take effect next month as a " meat cleaver" approach to reducing the nation's mounting debt, saying it is not helpful to U.S. economic recovery and job creation.

"Our top priority must be to do everything we can to grow the economy and create good, middle-class jobs. That's our top priority. That's our North Star," he reiterated the message unveiled in his State of the Union address earlier this month.

Roughly 85 billion U.S. dollars of spending cuts were set to hit various governmental departments this year starting on March 1, as agreed by Democrats and Republicans in January to resolve the so-called "fiscal cliff."

"That's why it's so troubling that just 10 days from now, Congress might allow a series of automatic, severe budget cuts to take place that will do the exact opposite," said Obama, who was flanked by a group of first responders, adding that emergency responders' ability to help communities recover from disasters will be degraded.

The across-the-board automatic government spending cuts, the so- called "sequester" or "sequestration" in U.S. government budget language, were included in the August 2011 debt-ceiling package to force lawmakers to come up with a long-term deficit reduction plan.

The package also created a 12-member debt reduction super- committee of top lawmakers who were tasked to come up with a plan to replace the sequestration. The committee failed in November 2011, and a total of more than 1 trillion dollars cuts over the next decade were set to begin in January, or about 109 billion dollars per year.

A short-term "fiscal cliff" deal shifted about 24 billion dollars of the first two months of spending cuts into future government appropriations bills, but the last-minute plan still left 85 billion dollars in government outlays cuts to begin in March.


Obama used the press conference to slam Republicans for refusing more government revenue to solve the nation's debt problem, urging a balanced plan that pairs spending cuts with tax reform to close special interest loopholes and make sure billionaires can not pay a lower tax rate than their secretaries.

Obama threw his support behind a recent proposal by Democratic lawmakers to replace the sequester with less drastic spending cuts and more government revenue.

Senate Democratic leaders last week proposed the 110-billion- dollar sequester replacement bill to replace 85 billion dollars in spending cuts set to hit on March 1. The new package is split evenly between spending cuts and new tax revenues.

However, after accepting an income tax rate hike for households making more than 450,000 dollars a year to resolve the "fiscal cliff" challenge in January, the first time in two decades that GOP lawmakers gave the green light to an income tax increase, GOP lawmakers seemed unlikely to compromise on a new round of tax hike.

Despite a 15-minute talk of a responsible fiscal policy, Obama did not specify on how to reform U.S. entitlement programs in the long run, the major driver of U.S. public debt surpassing 16.4 trillion dollars.

Combined U.S. healthcare spending including Medicare, a federal insurance program mainly for the senior Americans, and Medicaid, a state-federal program for low-income families, topped 2.6 trillion dollars, or 17.9 percent of U.S. economic output in 2010, highest among all developed countries globally, governmental data showed.

Between 1985 and 2009, spending for Medicare program alone, which covers around 48 million people, grew almost 9 percent annually, compared with a 5-percent annual economic growth during those years, according to figures from the Kaiser Family Foundation.


As Republicans and Democrats remained at an impasse on how to cope with the 85 billion dollars spending cuts, Erskine Bowles and Alan Simpson, two U.S. budget veterans, on Tuesday announced their new framework to cut 2.4 trillion dollars debt over the next decade. But the grand plan has slim chance to be passed by the divisive Congress.

In February 2010, Obama created the National Commission on Fiscal Responsibility and Reform, dubbed as Bowles-Simpson commission after the two co-chairs' names, to find ways to improve the long-term fiscal outlook. Bowles, former President Bill Clinton's White House Chief of Staff, was chosen to serve as a co- chairman with former Republican senator Simpson.

The 4-trillion-dollar debt reduction plan put forward by the panel in December 2010 failed to become law due to Democratic and GOP lawmakers' inability to bridge their significant differences on taxes and entitlement program reforms.

The scaled-down Bowles-Simpson plan released on Tuesday calls for 1.2 trillion dollars government spending reduction, 600 billion dollars healthcare savings and 600 billion dollars new tax revenue over the next 10 years.

In Washington, Bowles-Simpson plans have become a nickname for a "grand bargain" to resolve U.S. government debt problem, but GOP leaders and Obama did not conduct any meeting to ink such a deal this year.

Speaking at a press conference here on Tuesday, Bowles struck a cautious tone on the next "grand bargain" negotiation, saying "the idea of a grand bargain is at best on life support."

Obama will have a "failed presidency" if he fails to deal with Social Security and other entitlement program reforms in an earnest way, Simpson cautioned at another event hosted here on Tuesday by POLITICO, an American political journalism organization based in Arlington, Virginia.

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