Now that last week's budget battle is over, the real fiscal war can—and will—begin in earnest.
Democrats and Republicans both claimed victory in the fiscal year 2011 spending package that they negotiated Friday night. But this week they will go at it again when House Budget Committee Chairman Paul Ryan presents his FY 2012 budget to the full House and President Obama on Wednesday gives a major speech outlining a new package of deficit reduction ideas for his version of the 2012 budget.
Ryan's budget calls for about $5.8 trillion in spending cuts over 10 years, mostly from Medicare, Medicaid and other entitlement programs. Obama, meanwhile, is expected to lay out his plan for reducing the U.S. deficit, an issue that he has avoided until now, leaving the debate over taxes and spending cuts to Congress.
All tax issues originate in the House. The House Budget Committee provides a blueprint for the budget, but it's the House Ways and Means Committee that writes the legislative language. The Ways and Means Committee is involved in all issues involving revenues and taxes, including budget deals.
"Every corner of the federal government has to be looked at here," said David Plouffe, a senior White House advisor, on Sunday in a television appearance, adding that tax increases are on Obama's docket. "Revenues are going to have to be part of this."
Obama is expected to propose cuts to entitlement programs, including Medicare and Medicaid, and changes to Social Security, according toThe Wall Street Journal. Obama also will call for tax increases for people making over $250,000 a year, a proposal contained in his 2012 budget, and changing parts of the tax code he thinks benefit the wealthy.
The speech, which will address deficit reduction, is expected to go beyond Obama's initial FY 2012 budget released in early February, which avoided major entitlement savings.
Also this week, the House and Senate prepare to vote on the FY 2011 spending package agreed to late on Friday night by congressional and White House negotiators. The agreement will pay for government operations through the end of September while trimming $38.5 billion in spending. The plan cuts spending by $78 billion below what Obama first proposed.
