Obama Proposing Bigger Cuts to Control US Debt

Posted July 7th, 2011 at 9:10 am (UTC-5)
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U.S. President Barack Obama is proposing a bolder package to slash spending and increase some tax revenue in an effort to break the political impasse over America’s growing debt.

White House and congressional aides say Mr. Obama will propose doubling the amount of money trimmed from the country’s budget deficit to $4 trillion when he meets with Congressional leaders Thursday.

They say the new package will include significant cuts to Social Security and Medicare – two of the country’s biggest social safety nets. It would also call for increasing tax collections from large corporations and letting tax cuts expire for the wealthiest households.

Talks between the White House and Republican leaders in Congress fell apart two weeks ago, when they failed to agree over a package that would have reduced the country’s budget deficits by about $2 trillion over the next ten years.

The top Republican in the House of Representatives, Speaker John Boehner, has said any deal that includes tax hikes “cannot pass the House.” But House Majority Leader Eric Cantor said Wednesday Republicans would be willing to discuss closing some loopholes that give tax breaks to some corporations and wealthy Americans.

Some members of Mr. Obama’s Democratic Party have already expressed concerns about any cuts to the nation’s social safety nets.

Washington has run up a total debt of $14.3 trillion, the current legal borrowing limit. If the limit is not increased before August 2, the U.S. could default on some of its loans.

U.S. Treasury officials have repeatedly warned of “catastrophic” economic consequences if Congress does not raise the so-called debt ceiling before August 2.

Using the social media site Twitter Wednesday, Mr. Obama took a jab at Republicans for earlier refusing to consider tax changes in the debt negotiations. He said Republicans cannot threaten to force the U.S. to default on its loans to protect tax loopholes for the “very richest Americans.”

Opposition Republicans say they want to see drastic cuts in spending before they will agree to an increase. .