Health, taxes the big issues
Published 04/11/2010 | 05:00
Major battles loom between Barack Obama and the new Republican-controlled House of Representatives over tax cuts and healthcare, the signature reform of the President's first two years.
Republican leaders have promised to dismantle the $1trn (€700bn) health bill, which polls show is now rejected by a narrow majority of Americans. Though such efforts could be blocked by the Senate, where the Democrats retain a slim majority, or even vetoed by the President, Republicans are likely to advocate dismantling some elements of the bill, which they regard as too expensive.
In the coming weeks, the so-called "lame duck" Congress, which precedes the new Congress in January, will try to reach a compromise on tax cuts passed by George W Bush which expire at the end of the year. Mr Obama wants them extended for everyone but the top earners, while Republicans want the rich to be included, to boost consumer spending and confidence.
With voters tired of Washington's inability to fix problems, both Mr Obama and the Republicans will have to strike a balance between striving to get things done and not disappointing supporters.
Mr Obama will try to introduce a law which would give some form of right of abode to an estimated 11 million illegal immigrants. A compromise is considered unlikely, given the opposition among Republicans to what is regarded as amnesty.
Some observers hope both sides will co-operate to reduce the national deficit and draft major reforms to bring down the country's long-term debt.
But the prospect of a British-style austerity programme in the two years before the next election are not high, not least because of the magnitude of the task. Cutting spending would mean reforming the state pension, free healthcare for the elderly and the defence budget.
Bill Galston, a domestic policy expert at the Brookings Institution, said: "At some point there will be a critical mass for a grand bargain and the kind of policies Mr Cameron is putting into place. It can't come soon enough."
Areas where co-operation is more likely include green industry, confronting China on currency manipulation and furthering free trade agreements with South Korea and Colombia.
John Boehner, who is expected to be named the next Speaker of the House of Representatives, yesterday promised to repeal Mr Obama's healthcare reforms.
"I believe the healthcare bill that was enacted by the current Congress will kill jobs in America, ruin the best healthcare system in the world, and bankrupt our country," the Ohio Republican said.
He said his aim was to replace the bill with "common-sense reforms to bring down the cost of healthcare". (© Daily Telegraph, London)