Obama Budget To Spark Fight In U.S. Congress

Obama will be giving an outline of his budget on Thursday and is expected to fill in the details in coming weeks.

U.S. President Barack Obama sends his first budget proposals to Congress on Thursday bracing for fights over how best to heal the economy, create a new healthcare system and still cut out-of-control deficits.

Obama can take some comfort in knowing that his fellow Democrats in Congress -- who control both chambers -- most likely will not pronounce his budget "dead-on-arrival," as has happened so many times to past presidents.

Even so, experts think that over the next several weeks, as lawmakers craft their own budget blueprint in response to Obama's request, the popular new president could be in for his first real fight with Congress.

"It won't be smooth sailing," predicted Maya MacGuineas, president of the Committee for a Responsible Federal Budget, which wants tough controls to bring down deficit spending and reform expensive programs like Social Security and the Medicare healthcare program for the elderly.

Obama, elected last November in part on a promise to foster fiscal responsibility, has seen Washington push through almost $1.5 trillion in emergency spending since October to fight a 14-month recession and a spreading global credit crisis.

He says the spending binge is crucial to head off an even bigger economic disaster. But it has riled Republicans, who accuse Obama of ramming through Democratic priorities with scant attention to bipartisan support.

Obama will be giving an outline of his budget on Thursday and is expected to fill in the details in coming weeks.

CUTS AND FLASHPOINTS

One possible flashpoint in the new budget, MacGuineas said, could be the degree to which the Obama administration decides to pay for new initiatives, such as healthcare or expanding education aid, with equal cuts to other domestic programs.

"Democrats (in Congress) may push back and say that's too aggressive" and counter that there is pent-up demand for higher domestic spending, she said.

At the same time, Republicans and moderate Democrats in the House of Representatives will be counting on Obama to hold to his promise to put the brakes on some domestic spending.

House Minority Leader John Boehner gave an indication of how his fellow Republicans will react to Obama's budget when he said in a statement on Tuesday that Washington should institute "a spending freeze so we can get our budget in order."

Given that Democrats control the White House and Congress, Boehner's idea is not expected to gain much traction.

Congress is bracing for a 10-year budget outlook from the White House that won't be pretty: federal spending topping $3 trillion a year and whopping budget deficits throughout Obama's first term.

While the White House promises to slice those deficits in half, administration officials say they still would be $533 billion in 2013, the year that analysts had previously hoped to see a balanced budget.

Some experts fear that if the record pace of government borrowing to finance debt continues, a severe impact will reverberate through financial markets through rising interest rates for borrowers, which in turn would slow economic growth.

STICKER SHOCK

Hopes of a balanced budget were dashed by the a severe economic recession that slowed government revenues. At the same time, federal spending is skyrocketing as officials stimulate the economy with $787 billion in spending and tax cuts and provide $700 billion to bail out the financial sector.

As a result, politicians and the public are suffering "sticker shock" from watching hundreds of billions of dollars shoveled out of Washington.

Nonetheless, Obama will ask Congress, both in his budget and in separate legislation, to expand affordable health insurance to millions of Americans who are not covered -- yet another new request for billions of dollars.

"Health care reform cannot wait, it must not wait, and it will not wait another year. This budget builds on these reforms," Obama told Congress in a speech on Tuesday.

Obama's budget is expected to touch off a fierce fight over tax policy. Many of former President George W. Bush's tax cuts are due to expire at the end of next year and Obama has warned he has no intention of renewing the benefits for the wealthy.

That is just one more wedge likely to be driven between Democrats and Republicans, further complicating Obama's drive to achieve bipartisanship.

Congress hopes to pass a budget plan by early April and in the past two years, Democrats have had little support from Republicans.