Obama threatens to veto Republican's shield of defense cuts

Reuters News
Posted: May 10, 2012 4:42 PM
Obama threatens to veto Republican's shield of defense cuts

By David Lawder

WASHINGTON (Reuters) - President Barack Obama threatened on Wednesday to veto a Republican bill that would partially replace looming automatic budget cuts and protect military spending at the expense of food stamps and other social programs.

The White House said in a statement that the cuts proposed by Republicans would "cost jobs and hurt middle-class and vulnerable Americans - especially seniors, veterans and children."

"The bill's unbalanced provisions fail the test of fairness and shared responsibility," the White House added.

The veto threat escalates one of several new budget battles that have broken out this spring in Washington.

The automatic cuts, about $1.2 trillion over 10 years, were set in motion by last summer's debt-limit deal, after a congressional panel failed to specify further deficit-reduction measures. Unless Congress takes action to stop them, the across-the-board cuts are scheduled to hit in January.

"The threat of these destructive cuts under the Budget Control Act was intended to be a mechanism to force action by the Congress on deficit reduction," the White House said.

The House of Representatives on Thursday is expected to vote on the Republican plan, which would produce net savings of $242 billion over 10 years, according to a new Congressional Budget Office estimate. It would allow for a small increase in military spending by cutting food stamps, social services block grants to states and the Medicaid health care system for the poor.

House Democrats want to float an alternative plan as an amendment that instead would end tax breaks for big oil companies, raise taxes on millionaires and cut farm subsidies.

The plan also stakes out Democrats' negotiating stance for dealing with the automatic cuts and provides another campaign-season contrast with Republican spending priorities.

A preliminary summary of the Democratic plan showed that it would replace all of the first year's automatic cuts - sparing the military as in the Republican plan - and save some $116.39 billion over 10 years.

The biggest portion of the savings, $46.7 billion, come from institution of the "Buffett rule", a new minimum tax rate for those with incomes above $1 million.

Ending tax breaks for the five largest large oil producers and cuts to crop subsidies would be the next largest savings contributors. The plan also would raise flood insurance premiums.

Replacing the automatic cuts is just one area where last year's budget fight is resurfacing. House Republicans are also working to pass spending bills that are written to levels lower than those agreed as part of last August's debt deal.

Democrats in the Senate are considering spending bills around the higher $1.047 trillion discretionary spending cap. If the dispute over these levels cannot be resolved, Congress faces the threat of another government shutdown battle just weeks before November's presidential election.

Obama also has threatened to veto one of the House bills that sets spending levels for the Justice Department, commerce-related agencies, and NASA and other science-related agencies. The White House said that departing from the agreed spending caps would hurt jobs, education, seniors and children as well as specific programs such as air traffic control.

(Editing by Philip Barbara)