WASHINGTON – The US House of Representatives last night approved the budget deal struck last week between President Barack Obama and congressional leaders.
The House voted in favour of the 11th-hour deal, which averted a government shutdown and cut $38 billion in spending in the current fiscal year, by 260 votes to 167.
The vote was the first act in a growing political battle over spending and debt, with the president and Congress gearing up for new fights over the 2012 fiscal year budget and an increase in the $14.3 trillion US.debt limit.
In a setback for House speaker John Boehner, 59 Republicans rebelled and he needed Democratic help to pass the deal. It was due to go to the Senate for final approval later last night.
Mr Boehner was under pressure to keep his Republican caucus in line and pass the Bill without Democratic support as it would strengthen his hand in future negotiations with Democrats and the White House as they pivot to new fights over the 2012 fiscal year budget and an increase in the $14.3 trillion US debt limit.
Meanwhile, President Obama defended his call for raising taxes on the wealthy yesterday despite heavy Republican opposition, saying all Americans must share the burden of reducing the long-term budget deficit.
Mr Obama’s push for ending tax breaks for the wealthiest Americans – part of the long-term debt-reduction plan he offered on Wednesday – has been criticised by Republicans, who say it would hurt small businesses and hinder economic growth.
“It’s not appropriate for us to ask for sacrifices from everybody except for the 2 per cent of Americans who are doing best,” Mr Obama said after an Oval Office meeting with Democrat Erskine Bowles and Republican Alan Simpson, who led a panel that made recommendations on cutting the budget deficit.
“We should ask everybody to participate in this effort to get our fiscal house in order,” he said.
Mr Obama’s plan for a $4 trillion reduction in the budget deficit over 12 years makes the issue a top priority for the administration and ensures the growing battle on debt and spending will be a prime focus of his 2012 re-election campaign.
Treasury secretary Timothy Geithner repeated administration warnings yesterday that a failure to raise the debt limit in the next few months would be irresponsible and have potentially grave economic consequences.
He told Republicans in Congress they would take the blame if they played politics with the issue and the country came too close to defaulting on its debt and roiled markets worldwide. – (Reuters)