Obama challenges Congress in $4tn budget gamble

US president Barack Obama Mr Obama hopes if talks fail, the Republicans will look like ideological hotheads

They are talking big at the White House.

Millions, billions, trillions, gazillions. The numbers are so huge as to be meaningless.

But forget any idea that this is about economics. It is politics in the raw.

President Barack Obama is playing double and quits. He has offered to double his package of cuts. From $2 trillion (£1.25 trillion) to $4 trillion.

His apparent offer to cut pensions (Social Security) and healthcare for the elderly (Medicare) will horrify many of his own supporters.

If the Republicans quit, refuse to do a deal in the face of what looks like the president being so willing to compromise that he is damaging his reputation with his own party, they will look like ideological hotheads.

Just to make sure they are put on the spot the president has laced his package with tax increases, which he knows are anathema to most Republicans.

He's already accused them of holding a gun to America's head in order to help the wealthy.

This may not work. The public may decide the Republicans are the ones being reasonable, that the president's proposed cuts are not big enough or even that the debt ceiling shouldn't be raised anyhow.

But the stakes are high. Mr Obama was elected in part on the big cuddly vision of bringing all sides together, to ending Washington politics as usual. That clearly hasn't happened.

So he has to have a story to explain why red and blue has not merged into a consensual purple. Indeed since he took office the gap between Republicans and Democrats has widened.

His latest offer of cuts is designed to make a specific argument - that he is willing to go the extra mile, to stick his neck out, but that his opponents are so entrenched in their narrow political foxhole that they would rather cause another economic crisis than make a single compromise.

Mark Mardell, North America editor Article written by Mark Mardell Mark Mardell North America editor


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  • rate this

    Comment number 818.

    BillyBobClinton = everything that is wrong with America today.

  • rate this

    Comment number 817.

    The first article of the United States Constitution clearly gives Congress has the power to lay and collect taxes. Also, All bills for revenue must originate in the House of Representatives. No money shall be drawn from the treasury, but in consequence of appropriations made by law.Congress has sole power power to lay and collect taxes. What is theGOP's problem? Go look it up!!

  • rate this

    Comment number 816.

    800 Lucy.

    US already in WWIII financially.
    Everything won in WWII in the Pacific, Europe, is being undone.

    Damage to USA in Bush Jr. term = worse than loss of Singapore; approx = losing at Midway, Dunkirk, Torch landings, El Alamein, Monte Casino, & Leyte Gulf.

    Tea Party idiots now want to convert that disaster into the equivalent of losing at Stalingrad and Normandy beaches. Insane.

  • rate this

    Comment number 815.

    793 Lucy
    It wasn't raising taxes that made the economy prosper.

    It was the demonstration to the world that serious adults were in charge, who were prepared to tackle problems.

    And instead, right now the Republicans are being held hostage by a bunch of "no new taxes" clowns, who would rather see their nation destroyed than behave like mature adults.

  • rate this

    Comment number 814.

    760 R.: time for tax cuts was after the fall, not during the boom. But by then that bolt had been shot.

    The Bush tax cuts were a bad, bad mistake, from inception.

    Last year federal revenue was 15% of GDP.
    Trend has been downward for years.

    Can't run a major western government on that.
    Even the Swiss can't, and they have the most democratic, most cost effective government on earth.

  • rate this

    Comment number 813.

    760. R
    Economist ran dozens of articles on why inflation was understated. You're right on deflation at end, but cause was previous carelessness with credit, and interest rates way too low, far too long. Extra money was being plowed into houses & unsustainable house price inflation.

    Remember: "House prices never goes down".

  • rate this

    Comment number 812.


    The Depression started in 1929, not in the 30's. And we certainly don't have Protectionism any more. In fact, if we had a little more of it, we might have more local industry and more jobs. But as it is, most of the industrial jobs have moved to China and the service jobs have moved to India.

  • rate this

    Comment number 811.

    Every time Obama compromised the Republicans just demanded more. They want everything but give nothing. They have no interest in the welfare of our country or in the common good, but seek only to serve their deep-pockets supporters. They have sold out their party and their country to the highest bidder. A pox on them all, and on any Democrats who follow their example!

  • rate this

    Comment number 810.

    Actually, if the American dollar becomes worthless, all those rich people with all that money will find it's all become worthless. But at least they won't have to pay any extra taxes on it.

  • rate this

    Comment number 809.

    Well the Republicans played an important part in tipping America and the world into Depression in the thirties with their Protectionism. Now they are doing it again with tax.

    Hegel said, history has a tendency to repeat itself; and Marx added that the first time as tragedy, second time as farce.

    And so it proves.

  • rate this

    Comment number 808.

    Is your fave beer Miller, Coors, Killian or Blue Moon?
    Get it while you can
    It would be none of the above.All beer renders me unable to stay awake, but if I could, it would be Guinness (or something like it).

  • rate this

    Comment number 807.

    @ #781
    Meh, MillerCoors can sink. Yuengling and Spaten are my go-tos.

    @ #793
    Even with the increases, the reagan tax rate was a cut. linton was lucky to preside over the dotcom bubble and could afford an increase on the sudden increase in wealth. This recession was provoked and exacerbated by bad governance, the bush tax break didn't help. Still, I oppose giving the louts more $$ to waste.

  • rate this

    Comment number 806.

    President will continue to hold talks; but told Republicans to stop political posturing. Eric Cantor, No. 2 Republican in HR, said talks yesterday were so acrimonious Obama walked out. "He said he had sat here long enough. No other president, Ronald Reagan wouldn't sit here like this." HR Speaker John Boehner, dismissed spending cuts offered by Obama as "gimmicks & accounting tricks".

  • rate this

    Comment number 805.

    Warning sent US dollar tumbling as well as gold climbing to a record high. Stock futures & debt prices fell. President met for nearly 2 hours on Wednesday to try to get a deal to reduce the deficit. Obama wants - a $4 trillion, 10-year deficit-reduction proposal, would eventually increase taxes, reform social entitlement programmes such as Medicare and Medicaid and cut government spending.

  • rate this

    Comment number 804.

    US in danger of losing status as one of most reliable borrowers of capital. Moody's, a credit rating agency, threatened to downgrade country's AAA credit rating, saying there's a small but rising risk that US may default on its debt. Announcement came just before Barack Obama reconvened debt talks that turned into what Republican aide said was tensest session in 4 straight days of meetings.

  • rate this

    Comment number 803.

    Republicans are balking on raising taxes on the highest earners & wealthy corporations as part of any plan, saying that doing so would kill job growth. Republicans demand steep spending cuts in return for supporting an increase in the debt ceiling ($14.3 trillion). Obama told Republicanst he would not yield further even if it puts his presidency at risk.

  • rate this

    Comment number 802.

    Lucy: "Can anyone say potential WWIII?"

    Only in a women's soccer match between US and Japan. :-)

  • rate this

    Comment number 801.

    @ #756
    Wow... totally. Not sure how I let that one slip.
    Anyway, I had a point but I lost it... Somethign about how the income differences between states is not find it surprising and that it is more of a corporation and taxation issure rather than a red/blue one. Not like big pharma centered around blue Philly doesn't get subsudized for research and equipment depreciation either.

  • rate this

    Comment number 800.

    China, the United States' biggest creditor with more than $1 trillion in Treasury debt as of March, fears even a small default could destabilise the global economy and sour political relations

    The only one who doesn't want default even more than Americans is Chinese

    If we default, they could lose trillions

    Can anyone say potential WWIII?

  • rate this

    Comment number 799.

    Norquist=unoffical GOP leader?

    An excerpt:
    There is one serious problem with Norquist's antitax fetishism, however. Reagan signed a tax increase - yes, a stiff tax increase, the first of three by the Gipper - as a deep recession was coming to an end in 1982 and the economy boomed. The same thing happened after Bill Clinton's 1993 tax increase


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