Obama faces struggle on slashing debt

President Barack Obama is facing a tough battle implementing his policy mix of tax increases, limits on military spending and cuts to benefits programs, as he was set on Wednesday to roll out a range of propositions on tax reform, defense savings and changes in government healthcare spending.

Obama, accused of laying low on an issue that will be crucial in the 2012 election, was to explain his vision for tackling the long-term US deficit and debt in a speech Wesnesday, Eastern Standard Time.

"The president will lay out four steps to achieve this balanced approach," an official said, citing defense-budget savings, waste from healthcare, domestic-spending control, and "tax reform that reduces spending in our tax code" – a reference to closing tax loopholes.

Obama viewed the speech as a chance to regain control of the spending debate by drawing sharp contrasts with a Republican proposal, unveiled last week, which aims to lower the deficit by $4.4 trillion over the next decade.

That proposal aims to cut spending on a massive scale and to lower taxes for businesses and individuals.

"This is an opportunity to use the bully pulpit to frame the choice rather than let the debate run away from them," said Chris Van Hollen, the top Democrat on the House of Representatives' Budget Committee.

The White House, which is seeking for Congress to raise the country's borrowing limit before a $14.3 trillion debt ceiling is reached as early as mid-May, says the Republican deficit plan tilts the playing field unfairly in favor of the rich.

The International Monetary Fund urged the United States on Tuesday to outline credible measures to reduce deficits.

Obama's budget proposal for next year reverses a landmark Bush tax cut on American families making more than $250,000 a year.

This comes after Obama reluctantly agreed to extend those tax breaks for two years in a compromise with Republicans in December to preserve tax cuts for less well-off families, as well as jobless aid and other benefits that he favored.

Agencies