Jan 25 (Reuters) - In his State of the Union speech on Tuesday, President Barack Obama is expected to challenge Republican proposals to cut the federal budget in an effort to slow the growth of the country’s $14 trillion debt.
Though the United States does not face an imminent Greek-style debt crisis, analysts warn that the country is on an unsustainable fiscal path if it does not reduce budget deficits that climbed above $1 trillion in recent years, the highest level relative to the economy since World War Two.
Obama has acknowledged the need to get deficits under control and has proposed several spending cuts, but is likely to use his State of the Union address to propose increased spending in areas like education and transportation.
Experts say the country’s fiscal problems will not be resolved until policymakers tackle benefit programs like the Medicare health-insurance program for the elderly, which account for more than half of all federal outlays and are expected to balloon over the coming decades.
Here are some facts about cuts Obama has proposed and what is known about Republican budget-cutting plans.
- In his budget proposal in February, Obama proposed a three-year freeze on many domestic programs that would save $250 billion over the coming decade.
- In November, he proposed a two-year freeze on federal workers’ pay, which the White House estimates would save $28 billion over five years.
- Defense Secretary Robert Gates outlined plans this month to cut $78 billion over five years by canceling troubled weapons programs and reducing troop levels.
- House Republicans campaigned last year on a promise to reduce domestic spending to 2008 levels, roughly $84 billion below the current budget.
- Republicans aim to impose these cuts when current funding expires in March, though they will have to find common ground with the Democratic-controlled Senate. Because the fiscal year will be nearly halfway through at that point, actual cuts could be closer to $50 billion.
- Republican leaders have declined to say which programs would be impacted, though some rank-and-file members have not been so circumspect.
- Possible targets include education funding, transportation, foreign aid, financial regulation, arts funding, environmental protection and health programs mandated by last year’s landmark rewrite of healthcare laws.
- Transportation, housing, environmental protection and foreign aid have been among the areas that have seen the sharpest increases since Obama took office.
- Republicans would exempt defense, security and veterans spending from this initial round of cuts.
- Benefit programs like Medicare likewise would be exempt from the initial cuts, though key Republicans like Budget Committee Chairman Paul Ryan have said they should be tackled as well.
- These cuts are unlikely to win approval in the Democratic-controlled Senate and Obama can veto any spending plan he deems too severe. But Republicans hope to win a commitment to reduce spending over the long-term in exchange for their support in raising the $14.3 trillion debt ceiling. (Reporting by Andy Sullivan)