US PRESIDENT Barack Obama hit the ball back into the Republicans’ court yesterday, challenging his opponents to compromise over the new proposed $3.77 trillion (£2.4 trillion) government budget.
Obama’s spending plan concedes to some cuts to welfare spending yet expects tax increases on the wealthy in return.
“When it comes to deficit reduction, I’ve already met Republicans more than half way,” Obama said in his speech at the White House.
“So, in the coming days and weeks, I hope that Republicans will come forward and demonstrate that they’re really as serious about the deficits and debt as they claim to be.”
Yet the stand-off between the US warring political factions looks set to drag on, a saga that could spook investors.
“I would hope that he would not hold hostage these modest reforms for his demand for bigger tax hikes,” responded John Boehner, the Republican’s speaker in the House of Representatives.
“The President got his tax hikes in January. We don’t need to be raising taxes on the American people. So I’m hopeful in the coming weeks we’ll have an opportunity, through the budget process, to come to some agreement.”
Other Republicans were less welcoming, with Mitch McConnell, Senate minority leader, describing the speech as a “left-wing wish list”.
Obama’s budget projects that it would cut the deficit to $744bn in 2014, or 4.4 per cent of GDP, from an estimated $973bn in 2013. America’s national debt has ballooned to around $16.8 trillion in recent years.