Tea Party Republicans to push for huge cuts

Tea Party-backed Republicans will likely dominate the House of Representatives this week, pushing a spending cut plan that stands little chance of passing either legislative chamber even though a potential U.S. default on its debt is just over two weeks away.

With the stalemate continuing and time growing short, House Republicans were gearing up to push even harder on their plan that dramatically cuts spending, rules out any tax increases and calls for a balanced-budget amendment to the U.S. Constitution.

However, such a plan is unlikely to be passed by the Democratic-controlled Senate. That makes the effort primarily an opportunity for House Republicans, particularly dozens of new lawmakers elected with the support of the small government Tea Party movement, to symbolically show their steadfastness in demanding huge cuts in government spending, opposition to higher taxes and ideological purity in balancing the budget.

President Barack Obama has vowed to veto any legislative measure that does not include higher taxes for America's wealthiest citizens and corporations, including the elimination of tax breaks for hugely profitable oil companies. He appears to be gaining ground with voters, especially pivotal independents.

His so-called balanced approach of spending cuts and tax increases has the backing of 69 per cent of Americans, according to a recent Gallup poll. And among those who aren't wed to an entrenched party view, pragmatism seems to be gaining traction over ideology.

A poll from the Pew Research Center found that among independent voters — coveted by both political parties looking ahead to the 2012 presidential and congressional elections — concern has shifted from fear that raising the debt ceiling would increase government spending to worry about the impact of the failure to raise the debt ceiling.

Independents split on deficit reduction

Two months ago Pew found that independents, by a 49 per cent to 34 per cent margin, were more concerned that raising the debt ceiling would lead to higher government spending, as opposed to chiefly fearing the harmful effects of keeping the ceiling unchanged. This month, independents split evenly on the question.

If the current $14.3 trillion US debt ceiling isn't increased by Aug. 2 — which past Congresses have done as a matter of course regardless of the party in control — it will have far-reaching consequences.

Default likely would produce higher interest rates for consumers on mortgages, car loans and credit cards. It also would make U.S. government borrowing more expensive and could stop government cheques from going out to elderly Social Security recipients. All that holds the potential for turmoil not only domestically but also in world financial markets and international economies.

Among some voters, there is suspicion that the talks in Washington are infused with the politics of the 2012 election in which the state of the economy will likely determine whether Obama wins a second term.

With no give in sight on either side, White House budget director Jack Lew remained optimistic on Sunday, saying time remained to "get something big done" before the Aug. 2 deadline.

Grand deal sought

Obama is pushing for a grand deal that would raise the country's $14.3 trillion debt ceiling — the amount that Congress allows the government to borrow — while reducing federal budget deficits over the next decade.

The big stumbling block remains Obama's insistence on closing tax loopholes that benefit the rich.

Republicans in the House of Representatives, especially those elected last year on pledges to shrink government and cut taxes, will dominate House activity in the coming week to emphasize their insistence that they will not back an increase in the debt ceiling without deep spending cuts to justify it.

They say that raising taxes for anyone, even millionaires, is off the table.

Democrats fear that huge cuts in spending will devastate public education and safety net programs they have advocated for decades — the national Social Security pension system and the government-funded health-care plans for the elderly and poor, Medicare and Medicaid.

Some public opinion polls show that voters like the idea of a balanced budget, but the government faces such massive budget gaps — it now borrows more than 40 cents of every dollar it spends — that the cuts required to eliminate the deficit were too draconian for even the Republican-dominated House to endorse balancing the budget anytime soon.

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Source: CBC news