White House rejects Tea Party debt plan

The White House weighed in with a veto threat Monday against a tea party-backed plan to let the government borrow another US$2.4 trillion, a measure conditioned on big and immediate spending cuts and adoption by Congress of a constitutional amendment to balance the federal budget.

At the same time, President Barack Obama said the two sides are "making progress" after a series of back-channel conversations with Republicans like House Speaker John Boehner of Ohio and Majority Leader Eric Cantor of Virginia, with whom Obama met on Sunday morning.

Boehner called the veto threat "unfortunate," and in a statement Monday said Obama's threat "should make clear that the issue is not congressional inaction, but rather the President's unwillingness to cut spending and restrain the future growth of our government."

"If we are going to raise the debt limit and avoid default, the White House must be willing to demonstrate more courage than we have seen to date," Boehner said.

A Boehner aide said the "cut, cap and balance" plan is still "the best path forward" and declined to characterise the hush-hush talks with Obama. Another spokesman, Brendan Buck, said "There is nothing to report in terms of an agreement or progress."

The House set to pass the plan on Tuesday but it's sure to stall in the Senate, where majority Democrats say it would lead to decimating budget cuts and make it harder to pass tax increases on the wealthy. The White House weighed in Monday, calling the bill an "empty political statement" that President Barack Obama would veto.

And even if the scheme could pass, there's no way Congress will adopt a balanced budget amendment, which requires a two-thirds vote in both House and Senate.

The plan does not actually include any spending cuts; rather, it endorses a spending cap on agency operating budgets for next year that the House is already working toward. The new plan promises to cut US$35 billion more from so-called mandatory programmes like farm subsidies, food stamps and Medicaid, the health programme for the poor and disabled, but doesn't say where they would fall.

In a statement, the White House warned that such an approach could force significant cuts in education, research, Medicare and Social Security, and "put at risk the retirement security for tens of millions of Americans."

- AP