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Gov't downsizes amid GOP demands for more cuts

Published on NewsOK Modified: February 22, 2013 at 1:19 pm •  Published: February 22, 2013
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And Florida Sen. Marco Rubio of Florida, delivering the GOP response to Obama's State of the Union address, said "a major cause of our recent downturn was a housing crisis created by reckless government policies."

Soaring recent government deficits are partially a side effect of the worst recession since the 1930s, which took a huge bite out of tax revenues at the same time spending increased on recession-fighting programs like unemployment compensation and stimulus measures under both Presidents George W. Bush and Obama.

"The problem going forward is one of demographics and rising health care. It is the baby-boom generation retiring," said Alice Rivlin, a White House budget director under President Bill Clinton. "It's the fact that everybody is living longer."

Republicans argue that entitlement programs should be on the cutting board as well as other government programs. Democrats generally have been more protective of them, although the president and many congressional Democrats acknowledge some paring of these popular programs is in order.

The federal budget deficit for the fiscal year ending Sept. 30 is estimated to be $845 billion — the first time it's dropped below $1 trillion in five years. But it's on track to rise again as more and more baby boomers retire and qualify for federal benefits and as interest payments on the national debt keep going up.

The national debt first inched past $1 trillion early in the Reagan administration and has grown in leaps and bounds ever since through both Democratic and Republican presidencies. It now stands at $16.6 trillion and is on a path toward soon becoming unsustainable, both parties agree.

Unchecked, entitlement payments will add roughly $700 billion to the debt over the next four years.

For now, though, "the economy is continuing to heal from the worst economic downturn since the Great Depression," top White House economic adviser Alan Krueger says.

Under the sequester law, roughly $85 billion in federal spending would be slashed in the remaining seven months of this fiscal year and a total of $1.2 trillion in cuts over 10 years.

While entitlement programs and uniformed military personnel would be exempt, the rest of the government would be hit with indiscriminate across-the-board cuts.

Obama wants government deficits trimmed through a mix of selective spending cuts and new tax revenues, mostly by ending deductions and tax credits frequently claimed by the wealthiest Americans.

Republicans oppose any new taxes, even if for closing loopholes rather than increasing rates.

The president has been making campaign-like trips to highlight the damage the pending sequester cuts would be to various sectors of the economy. On Tuesday he'll go to a shipbuilding company in Newport News, Va., the White House announced.

"In just seven days, a series of automatic cuts could go into effect that would severely affect companies, like this one, that depend on the defense industry and its workers," White House spokesman Jan Carney said Friday.

The looming spending cuts were first scheduled to take effect on Jan. 1. But they were postponed to March 1 as part of year-end "fiscal cliff" negotiations that also raised tax rates on affluent Americans. Republicans insist that's enough tax increasing for now.

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Follow Tom Raum on Twitter: http://www.twitter.com/tomraum