President Obama’s budget blueprint is not expected to foster a spring-like harmony in Washington. Both the left and the right are lining up to criticise it. The Senate and the House of Representatives have passed their own budget outlines which show this. Any concessions on social matters might please some but be offset by objections to tax increases.
Analyst Roberton Williams, at the Urban Institute, Brookings Tax Policy Center, confirmed this: “The real problem is, we’ve got such divergent views of the Democrats and the Republicans right now, such strongly held views on opposite extremes, it’s hard to imagine them coming together on a compromise. Each one is saying it’s my way or the highway.”
Plans to reduce deficits by hundreds of billions of dollars each year has many sectors insisting, ‘not out of our pockets!’ So we put the question to an economist whether there is realistic cause for alarm.
John Makin, with the American Enterprise Institute, said: “The Congress isn’t feeling the feet to the fire, that something awful is going to happen. A lot of people are going around saying ‘the bond market is going to collapse, the economy is going to collapse!’ Well, it isn’t.”
Experts believe that, given the political gridlock, the country will continue to muddle along without a regular budget, many thinking Obama’s plan raises more sticking points than starting points.
Roberton Williams said: “It would be very nice to have a budget, but if we don’t have a budget… We’ve managed fine for the last four years. We have done some spending, some additional spending, but basically we’ve put things on autopilot to a large degree.”
Obama has called his plan “fiscally responsible for middle class jobs and growth”, and says that he has given ground towards the Republicans in the interest of a deal. Our correspondent Stefan Grobe speculated on cautious optimism:
“Right now, there are no plans to create a House-Senate budget conference, but both sides continue to discuss the possibility. Insiders from the President’s party say they remain hopeful for reconciliation. Eventually, the Obama budget might push the parties on the path toward compromise.”
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