Obama marks accomplishments, spending fight looms

By Caren Bohan and Patricia Zengerle

WASHINGTON (BestGrowthStock) – President Barack Obama said on Wednesday he expected a robust debate with Republicans next year on the need to cut spending but was encouraged by the climate of compromise that led to a string of recent legislative victories.

When Obama returns to Washington from a Christmas break in Hawaii, he will face tough fights over reducing government spending, tackling record $1.3 trillion U.S. budget deficit and reforming the tax code with Republicans who will take control of the House of Representatives and gain strength in the Senate.

“I expect we’ll have a robust debate about this when we return from the holidays, a debate that will have to answer an increasingly urgent question and that is, how do we cut spending that we don’t need, while still making investments that we do need,” he said at a White House news conference.

Obama praised the Senate’s ratification on Wednesday of a nuclear-arms treaty with Russia and recent votes to extend tax cuts for all Americans and repeal the ban on gays serving openly in the military.

The bipartisan triumphs during the year-ending “lame duck” session of Congress — all three measures passed with support from Republicans as well as Obama’s fellow Democrats — followed months of gridlock and huge Republican gains in November’s congressional elections.

“If there’s any lesson to draw from these past few weeks, it’s that we are not doomed to endless gridlock,” Obama said. “We’ve shown in the wake of the November elections that we have the capacity not only to make progress but to make progress together.”

A clash is looming between Obama and Republicans who are emboldened by their election victories in November and are intent on pressing for deep spending cuts. Bond markets and firms that do business with the government are braced for an extended period of uncertainty.

“SHELLACKING” NOT FORGOTTEN

Obama stopped short of declaring the events of the past week marked the beginning of his political comeback, as some analysts have suggested.

Obama recalled that it was only six weeks ago that his Democrats had taken a “shellacking” in the November congressional elections.

“From the president’s standpoint, this lame duck session has been anything but lame. In fact, it’s been more like a 100-yard dash and he and the White House must be feeling quite pleased at this point,” said William Galston, a Brookings Institution scholar and former domestic policy adviser to President Bill Clinton.

Obama said he was disappointed by the failure of Congress to pass a long-term budget to fund the government and said he still believes it does not make sense to provide tax cuts to the wealthiest Americans.

“That’s a debate that’s going to continue into 2011,” he said. “And I know that Republicans feel just as strongly on the other side of that.”

The tax deal was greeted with fury among many on the left, who said Obama had given far too much to Republicans by agreeing to extend Bush-era tax cuts to the richest Americans as well as the middle class.

He defended his decision to drop his steadfast opposition to allowing tax breaks for the wealthy and said it was crucial to the long-term health of the economy.

Obama pledged to defend spending on areas such as education and research and development from budget cuts.

“There are going to be debates between the parties on those issues,” he said.

“My sense is that Republicans recognize that with greater power is going to come greater responsibility,” Obama said. “And some of the progress that I think we saw in the lame duck was a recognition on their part that people are going to be paying attention to what they’re doing.”

As he previewed his priorities for the coming year, Obama said the failure of an immigration measure known as the DREAM Act, was his biggest disappointment of the legislative session and he vowed to push for that in 2011.

(Additional reporting by Alister Bull and Tabassum Zakaria; Editing by Bill Trott)

Obama marks accomplishments, spending fight looms