WASHINGTON |
WASHINGTON (Reuters) - President Barack Obama and Republicans are headed for a fight over deficit reduction and spending cuts despite a conciliatory State of the Union speech that set the tone for a looming budget debate.
Obama, with an eye on his 2012 re-election bid, used his Tuesday speech to further a move to the political center that he was forced to make after Republicans routed Democrats in congressional elections in November.
Obama offered some potentially appealing proposals to Republicans -- a corporate tax cut, a retooling of the tax code and an end to pet spending projects relied on by many lawmakers.
In a bid to show he has fiscal discipline, he proposed a five-year freeze in some domestic spending, which he said would cut $400 billion from budget deficits over a decade, a move applauded by U.S. debt and stock traders.
To Republican calls for even deeper cuts, Obama said, "Let's make sure what we're cutting is really excess weight."
Republicans seeking $100 billion in cuts this year called Obama's plan too little, too late.
"A partial freeze is inadequate at a time when we're borrowing 41 cents of every dollar we spend, and the administration is begging for another increase in the debt limit," said House of Representatives Speaker John Boehner.
Obama sought in his speech to reassure Americans weary of stubbornly high 9.4 percent unemployment, fearful of rising debt, dismayed at vicious political rhetoric and worried that their country is falling behind economic powers like China and India.
"At stake is whether new jobs and industries take root in this country, or somewhere else. It's whether the hard work and industry of our people is rewarded. It's whether we sustain the leadership that has made America not just a place on a map but a light to the world," Obama said.
"SPUTNICK MOMENT"
Obama said the economy is growing again but more needs to be done. He called for a job-creating "Sputnik moment" fed by new spending in research and education like the 1950s space race unleashed when the Soviets launched the Sputnik satellite.
"Yes, the world has changed," he said. "The competition for jobs is real. But this shouldn't discourage us. It should challenge us."
The president heads to Wisconsin on Wednesday to drive home his message of innovation and job creation, visiting a renewable energy technology.
The challenge will be how he finances investment projects for future growth while addressing a dire fiscal outlook. On this Obama gave no hint, leaving details to his budget due in February.
It will be no easy task. The spending freeze would do little to alter the country's fiscal path -- a $1.4 trillion deficit this year and the $14 trillion national debt that Republicans vowed to slash.
Source: http://feeds.reuters.com/~r/Reuters/PoliticsNews/~3/RwOIOTvVvGc/idUSTRE70N64B20110126
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