House Democrats urge $100-billion cut in Obama's budget

US president Barack Obama is facing opposition from his own party to his proposed $3.6-trillion budget for fiscal 2010. The budget envisaged a spending plan that outlines big investments in energy, education, defense, health care and the ailing financial industry. (See: Obama unveils $1.75-trillion deficit budget).

The president scheduled a meeting with Senate Democrats on Capitol Hill to persuade them to back his long-range plans.

Republicans lambast the Obama administration saying that the budget puts additional tax burden on the common man.

House and Senate lawmakers are working on the president's fiscal 2010 spending blueprint to trim some of Obama's domestic programmes to cut more than $100 billion from Obama's proposal, unveild last month.

Senator Kent Conrad, a North Dakota Democrat who heads the Budget Committee, has come out with a spending plan that deletes a budget proposal that called for $250 billion to aid the financial sector.

Conrad proposes slashing $160 billion from Obama's request for nondefense programmes over the next five years, including a reduction of $15 billion in fiscal 2010 that targets international programmes.

According to his plan, the annual deficit will come down to $1.2 trillion next year, compared with $1.4 trillion under Obama's request. Over the next five years, the deficit would fall to just under $600 billion, requiring the nation to borrow $3.9 trillion, compared with $4.4 trillion under Obama's plan.

Senate majority leader Harry M Reid said Conrad's budget proposal "will protect President Obama's priorities - education, energy, health care, middle-class tax relief - and cut the deficit in half." He said he expects the full Senate to pass the budget next week.

White House budget director Peter Orszag hailed the House blueprint, as well as its counterpart in the Senate.

"The resolutions may not be identical twins to what the president submitted, but they are certainly brothers that look an awful lot alike," he told reporters.

However, the Republicans assailed the House Democrats' blueprint saying that it calls for a massive increase in the size of government, while Democrats charged that the previous Bush administration had saddled his successor with intractable fiscal problems, including a $1.3 trillion deficit.

"President Bush has left President Obama with a hard hand to play," said John M Spratt Jr, the House committee chairman. "President Bush told us we could have it all: guns, butter and tax cuts, too, and never mind the deficit." As a result, he said, the new administration now confronts the worst deficits in US history -- $1.7 trillion this year and $1.2 trillion next year.

Republicans accused Obama of proposing a budget that spends, taxes and borrows too much.
Paul Ryan, the top Republican on the committee, said that the Democratic proposal would add to "an enormous unfunded fiscal liability for our nation," produce a "huge expansion in spending, taxes and debt" and replace traditional American "self-reliance and personal responsibility" with federal government intervention and mandates.

Later in the evening, in a nationally televised news conference, Obama defended his budget plan, saying "the best way to bring our deficit down in the long run is not with a budget that continues the very same policies that have led to a narrow prosperity and massive debt.''

The President took several questions from members of the media, and reiterated the key areas he would like to see this budget focus on.

''We're beginning to see signs of progress,'' Obama said of the state of the economy since the stimulus plan was passed.

Volker to review tax code
Meanwhile, Obama has asked former Federal Reserve board chairman Paul A Volcker to review the federal tax code that aims to simplify individual credits, reexamine the corporate tax structure and closing the loopholes.

Volcker, who heads the president's Economic Recovery Advisory Board, has been given a deadline of December 4, Orszag said, adding that the tax gap is about $300 billion.

The tax gap is the difference between the amount of taxes owed by taxpayers and companies and the amount collected.

''There are hundreds of billions of dollars in uncollected taxes each year,'' Orszag said in a conference call. The Volcker board ''will be examining ways of being even more aggressive on reducing the tax gap.''