US House approves spending cuts
Washington - The Republican-controlled US House of
Representatives has adopted a dramatic 2012 budget plan that would cut the
country's debt by revamping the decades-old system that guarantees medical
insurance for Americans over 65 and to the poor and disabled.
The plan put forward by Republican Rep. Paul Ryan, the
budget committee chairperson, is at odds with a spending vision President
Barack Obama outlined earlier this week, which foresees tax increases for
high-income Americans while holding the line on those major social contract
With the 2012 presidential election campaign already under
way, Obama and his Democrats are locked in an ideological confrontation with
Republicans, especially a nearly 90-strong first-year class in the House of
Representatives that is allied with the ultraconservative tea party movement.
Their victory in November, under the flag of cutting
government spending and intrusion into the lives of Americans, gave Republicans
control of the House. That set in place a divided government that has forced
Obama to accept compromises on spending and taxation that have angered the
liberal wing of his Democratic Party deeply.
The US debt, in relation to the size of the American
economy, has reached alarming proportions. Republicans in particular are
pounding the issue, which they say endangers the country's domestic well-being
and its ability to influence world affairs. Most Democrats also accept the need
to cut spending but cannot swallow what they see as the draconian Republican
In an Associated Press interview Friday, Obama said the
Republican approach would mean "We would have a fundamentally different
society than we have now."
Beyond that, Obama said, "Literally, we couldn't afford
to fix the roads in the country under their budget."
The House approved the Ryan plan just a day after Congress
adopted legislation that cut $38.5bn out of the national budget for the
remaining 4 1/2 months of 2011. That money was cut from spending for US
government agencies and amounts to only about 12% of total government outlays.
The White House said Friday that Obama had signed the
short-term spending extension.
The Republican spending outline for the next fiscal year
beginning October 1, calls for cuts of $5.8 trillion over 10 years. It would
reduce tax rates for corporations and the wealthy, and eliminate various tax
The measure, a nonbinding blueprint that sets a theoretical
framework for future legislation, also would dramatically cut Medicaid, the
medical insurance programme for the poor and disabled, and transform it into a
grant program run by the states. It does not touch Social Security, the
national pension system, or immediately cut Medicare.
It does, however, call for transforming Medicare into a
system under which the government provides future retirees with vouchers to buy
private insurance plans. People now 55 and over would stay in the current
system, but younger people would receive the insurance subsidies. Economists
say those vouchers would lose value over time because they would not keep pace
with fast-rising medical costs.
Obama's plan, outlined earlier this week's calls for cutting
the federal deficit by $4 trillion over 12 years by eliminating health care
fraud, raising taxes on the wealthy and paring defence spending.