The Republican-controlled House of Representatives threw down the gauntlet to President Barack Obama on July 19 by voting to cut federal spending by US$6 trillion and demand a constitutional balanced budget amendment in exchange for agreeing to raise the federal debt ceiling.
The US must raise the debt ceiling by August 2 or default on its debts for the first time, potentially leaving the government unable to pay its employees and plunging the world into a second credit crunch.
The bill is unlikely to pass into law.
The Democrat-controlled Senate will almost certainly reject it. Even if they do not, Obama has said he will veto it if it gets to his desk.
But the vote shows that, despite a recent Senate plan drawn up by the bipartisan “gang of six”, which the president praised as “broadly consistent” with his own ideas, the US Congress is still in no mood to compromise — even if its intransigence leads to a historically unprecedented default.
Obama has outlined a savage program of cuts to reduce the US deficit, aiming to balance books with a spending cuts to tax increase ratio of 83-17.
But it does not go far enough for many Republicans, who say taxing the rich more is not an option. Instead they want the government to slash spending on Medicare, Medicaid and food stamps budgets instead.
To qualify for food stamps, US citizens must show that they live in “near poverty conditions”.
Over 44 million people are now receiving them, the most in US history.
[Reprinted from MorningStarOnline.co.uk.]