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U.S. officials debate deficit-cutting strategies
Last Updated(Beijing Time):2012-04-05 09:57

Comments from U.S. officials this week showed politicians sharply disagreed on how to address the growing U.S. deficit, as U.S. Treasury Secretary Timothy Geithner elaborated on ways to cut the deficit in Chicago Wednesday.

Prominent Republicans championed the House budget engineered by Paul Ryan, while the Obama administration argued such severe spending cuts would harm future American growth.

Geithner, at an event for Chicago's Economic Club, shared his thoughts on the recovering U.S. economy and the challenge of reducing the national deficit.

Although he called the recent improvement in the U.S. economy "promising," he cautioned the country should not be too quick to institute any severe measures that could put that recovery in jeopardy.

According to Geithner, historical examples showed that severe deficit cutting measures made too soon after a financial crisis could bring about new recessions and economic difficulties.

Specifically, Geithner cautioned against measures that would reduce the deficit through massive cuts to investments in safety net programs or education.

"Cutting government investments in education and infrastructure and basic science is not a growth strategy," Geithner said, noting even before the financial crisis 20 percent of American children were living in poverty, and competitive schools and healthcare should be one of the government's top priorities.

"Cutting deeply into the safety net for low-income Americans is not financially necessary and cannot plausibly help strengthen economic growth," Geithner continued.

Although Geithner made no specific references, his remarks seemed to reflect the current debate in Washington on how best to reduce the national deficit, in which the Republican-controlled House of Representatives is pitted against the Democratic Senate and the Obama administration.

At an Associated Press luncheon Tuesday, President Barack Obama came out strongly against the Republican budget passed last week by the House, slamming it as "thinly veiled social Darwinism."

The 3.5-trillion-U.S.-dollar proposed budget - often referred to as the Ryan budget after its main architect, Wisconsin Representative and Chairman of the House Budget Committee Paul Ryan - aims to lower the national deficit through significant spending cuts and reform to entitlement programs such as Medicare.

In addition to these cuts to social programs, the Ryan budget would also lower tax rates, a sticking point among the two parties in the heated political debate.

While Republicans argue tax breaks will stimulate growth and drive the economy, Democrats hold such policies would benefit the wealthiest Americans at the expense of the middle class.

The deficit-reducing cuts suggested in the Ryan budget seem to be exactly the sort of measures Geithner warned against in Chicago Wednesday, and the criticism levied by Obama Tuesday.

In his Tuesday luncheon remarks, the president argued "by gutting the very things we need to grow an economy that's built to last - education and training; research and development; infrastructure - (the House budget) is a prescription for decline."

Geithner largely echoed those of the president, saying drastic spending cuts to social programs in order to slash the deficit were "a dark and pessimistic vision of America."

"This strategy is a recipe to make us a declining power -- a less exceptional nation," Geithner commented.

Ryan and Republicans, however, shot back to the criticism this week that drastic action is necessary to combat the expanding national debt, and such spending cuts now are central to U.S. economic health in the future.

"The president refuses to take responsibility for the economy and refuses to offer a credible plan to address the most predictable economic crisis in our history. Instead, he has chosen tired and cynical political attacks as he focuses on his own re-election," Ryan said in a statement Tuesday.

Ryan argues major spending increases have so far not brought about the results promised, and that his House budget - which he calls the Path to Prosperity - is the only way to ensure economic sustainability in the current debt-ridden environment.

The Ryan budget is nearly certain to fail in the Democratic-controlled Senate, and any alternate budgets passed by the Senate would likewise fall short in the House.

The deep partisan division currently seen in Congress is one of the primary reasons the U.S. government has encountered such difficulties as agreeing to raise the debt ceiling last summer, which was delayed to such a degree that it caused rating agency Standard & Poor's to downgrade the U.S. credit rating.

With both Republicans and Democrats firmly set in their beliefs and hesitant to compromise, actual progress in debt reduction is currently at a minimum, while Congress' approval rating among Americans is at only 12 percent, according to the latest Gallup poll released on March 21.

Source:Xinhua 
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