Washington Extra – The Pentagon and the poor

May 8, 2012

House Budget Chairman Paul Ryan (R-WI) shows a copy of the "FY2013 Budget - The Path to Prosperity" during a news conference at Capitol Hill in Washington March 20, 2012. U.S. House Republicans placed a major election-year bet Tuesday on a deficit-slashing budget proposal the party hopes will win over voters and quell any concerns about the plan's most controversial element - a sweeping revamp of Medicare. REUTERS/Jose Luis Magana

Never ones to shy away from a budget fight, the current crop of House Republicans pushed ahead with their latest deficit-reduction ideas – ones that weren’t exactly designed to win bipartisan support. 

By throwing last summer’s delicately-crafted budget deal overboard, this updated plan mandates deeper cuts to social programs for the poor while adding money to military accounts. Food stamps, child tax credits and Medicaid healthcare would all feel the knife, while the Pentagon would escape all of the cuts that otherwise would begin triggering in January.

Nobody is under the illusion that Democrats will let this fly in the Senate. But the House Budget Committee maneuvering is an important exercise anyway as it gives an early glimpse at how a spending-cut debate could be waged at the end of this year – after the Nov. 6 presidential and congressional elections.

That debate will be shaped by the outcome of the vote. In the meantime, get ready for a lively conversation throughout the U.S. over how best to shrink the government’s economic footprint and tame huge budget deficits.

Here are our top stories from Washington…

House Republicans target social cuts to shield military – Republicans in the House of Representatives will fire their first shots of the next deficit-reduction battle, advancing legislation to cut nearly $380 billion largely from social programs while protecting defense spending. The cuts to food stamps, child tax credits and Medicaid healthcare for the poor, among others, are certain to stall in the Democratic-controlled Senate. But they stake out Republicans’ negotiating stance on replacing $1.2 trillion in automatic, across-the-board spending cuts that are due to take effect in January. For more of this story by David Lawder, read here.

Plot using redesigned underwear bomb thwarted: U.S. officials – A plot similar to previously attempted Al Qaeda in the Arabian Peninsula bombing attacks using a redesigned underwear bomb for use on aircraft was thwarted and no airline was ever at risk, two U.S. counter-terrorism officials said. “This device has the hallmarks of previous AQAP bombing attempts,” one official said on condition of anonymity. “The plot was disrupted well before it threatened American or U.S. allies and no airlines were ever at risk from this device.” For more of this story, read here.

House to vote Wednesday on Ex-Im Bank deal – The House of Representatives is expected to vote on Wednesday on a bipartisan deal to keep the Export-Import Bank operating past May 31st and gradually raise its lending cap to $140 billion, a House leadership aide said. House Majority Leader Eric Cantor, a Virginia Republican, and House Minority Whip Steny Hoyer, a Maryland Democrat, struck the deal on Friday, signaling an end to months of uncertainty about the future of the government bank.  For more of this story by Doug Palmer, read here.

Divided US Congress likely to agree on student loans – One way or another, Congress seems certain to prevent a low interest rate for federal student loans from doubling on July 1, aides and analysts say, largely because lawmakers do not want to rile young voters before the Nov. 6 elections. Yet it remains unclear how – or even if – Congress will pay for a one-year-renewal of the 3.4 percent rate for about 7.4 million students, which would cost about $6 billion. For more of this story by Thomas Ferraro, read here.

U.S. keeps India waiting on Iran sanctions waiver – Secretary of State Hillary Clinton leaned on India to cut its imports of Iranian oil further, and said Washington may not make a decision on whether to exempt New Delhi from financial sanctions for another two months. As Tehran’s second-biggest crude customer, India is crucial to U.S. efforts to squeeze Iran’s economy until it agrees to curb its nuclear program, which the United States and other Western nations suspect is a cover to build atomic weapons. For more of this story by Andrew Quinn, read here.

U.S. education secretary adds support to gay marriage – Secretary of Education Arne Duncan said that same-sex couples should be allowed to marry, following a similar comment from Vice President Joe Biden the day before. For more of this story by Lily Kuo, read here.

Study: US healthcare access to erode if law struck down – Most Americans have seen a decade-long erosion in access to medical services that is likely to continue if President Obama’s healthcare law is struck down by the Supreme Court or repealed in Congress, a study shows. The study, one of a series on the fractured state of the $2.6 trillion healthcare system published in the May issue of the journal Health Affairs, says access to health care deteriorated for U.S. adults aged 19 to 64 between 2000 and 2010, even among those with private health insurance. For more of this story by David Morgan, read here.

Senate confirms two communications regulators – The Senate confirmed President Obama’s picks to fill vacant seats at the FCC, ending a months-long wait for the nominees, who found themselves tangled in wireless startup LightSquared’s fight for survival. For more of this story by Jasmin Melvin, read here.

Old feud appears to sink Obama’s Fed nominees – President Obama’s two nominees to the Federal Reserve appear likely to fall victim to a long-running political feud, which would leave the central bank short-handed as it struggles with tough regulatory and monetary policy questions. Republican Senator David Vitter has demanded that the Senate hold a debate before any vote on the nominees, which would require Democratic leaders to muster a super majority to move forward – a hurdle that may be too high to clear. For more of this story by Mark Felsenthal and David Lawder, read here.

Obama makes first official campaign stop – President Obama kicks off his re-election bid, making his first official campaign stop in the battleground state of Ohio. For this video, click here.

From elsewhere…

Anti-austerity ballot backlash rattles euro zone – An anti-austerity backlash by voters in Greece and France shook the euro zone, causing jitters for the euro currency and stock markets amid deepening doubts about whether Greece has a future in the single currency. Greece, where Europe’s sovereign debt crisis began in 2009, slid into turmoil after an election on Sunday boosted left and right-wing fringe parties, stripping the two mainstream parties that backed a painful EU/IMF bailout of their parliamentary majority. For more of this story, read here.

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