Obama to cut care for poor and elderly as US debt soars
Published 11/04/2011 | 05:00
US President Barack Obama will propose cuts in healthcare provision for the elderly and the poor this week as he seeks to reach agreement with Republicans on bringing America's record levels of debt under control.
Mr Obama is expected to lay out plans on Wednesday that will include reform of Medicare and Medicaid, the major subsidised healthcare schemes that are among the main causes of the country's $14.25trillion (€9.8tn) national debt.
"The president will be laying out his approach to long-term deficit reduction," said David Plouffe, a senior adviser at the White House, adding that Mr Obama would call on both sides to compromise.
"If we are going to make progress, the parties are going to have to come together to find common ground," he said.
Last week, Mr Obama was forced into accepting $38.5bn (€26.6bn) in cuts demanded by Republicans for other types of spending in order to secure a last-minute deal to keep the government running for the rest of the financial year.
Although the president and his aides have presented the avoidance of a shutdown as proof of his abilities as a bridge-builder, the row is seen as a success for the Republican majority in the House of Representatives and its supporters.
Robert Reich, who was labour secretary under Bill Clinton, said that the president had "caved in", securing a "tactical win but a strategic loss".
Mr Obama's speech is recognition that he needs to gain the initiative on spending amid deep public concern about the viability of the US economy.
Having launched his 2012 re-election campaign, analysts say he needs to produce a plan that will convince voters that deficits will be brought under control.
Republicans have already taken the lead on the issue, with representative Paul Ryan, the chairman of the House budget committee, releasing a 2012 budget plan that included major cuts to Medicare, which provides for the retired; and Medicaid, which helps the poor.
Mr Plouffe said Mr Obama's ideas would not be as radical and he was likely to call for the restoration of tax rises for the rich and further cuts in defence expenditure.
The battle over this year's budget is only the first of several larger debates on spending. The next is due to be over raising the country's $14.3tn debt ceiling so it can continue to pay its creditors.
That ceiling will be reached in mid-May and Republicans are promising to demand more cuts before agreeing to raise it.
Representative Jeb Hensarling of Texas said: "We don't want America to default. . . but the president is going to have to work with us to cut up the credit cards and put the nation on a fiscally sustainable path."
The tense negotiations between Mr Obama and congressional leaders that produced a last-minute deal to keep the government operating underscored the difficulties to come. (©Daily Telegraph, London)