WRAPUP 2-Obama to offer U.S. deficit plan, more fights loom

* Obama to lay out deficit reduction plan this week

* Republicans skeptical, say bigger fights still coming
(Adds Cantor and Plouffe quotes, details)

By John Whitesides and Susan Cornwell

WASHINGTON, April 10 (Reuters) – With one budget fight
behind him, President Barack Obama will offer a long-term plan
for deficit reduction this week in preparation for bigger U.S.
spending battles ahead, the White House said on Sunday.

Senior White House adviser David Plouffe said Obama would
explore savings in defense spending and the popular Medicare
and Medicaid health programs for the elderly and poor as he
seeks ways to reduce the $1.4 trillion annual deficit.

The plan, which officials said would be released on
Wednesday, also will revisit the issue of tax increases for the
wealthy and spell out specific deficit-reduction targets and a
timeline, Plouffe said.

“He’s going to be clear about the type of deficit reduction
we need in terms of dollar amounts, over what period of years,”
Plouffe told CNN.

The move follows Friday night’s 11th-hour spending deal
between Obama, Senate Democrats and Republican leaders in the
House of Representives to avert a government shutdown with $38
billion in spending cuts for the rest of this fiscal year.

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Analysis of Obama, Boehner relationship [ID:nN09213560]

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Much harder battles lie ahead as Congress takes up a budget
for the 2012 fiscal year that begins in October and considers
the need to raise the current $14.3 trillion limit on U.S.
government borrowing authority in the next few months.

Republicans, who made big gains in November’s election with
promises to cut spending and rein in government, were skeptical
of Obama’s plan and his sincerity on deficit reduction.

“For the last two months we’ve had to bring this president
kicking and screaming to the table to cut spending,” said
Representative Eric Cantor, the No. 2 House Republican.

“In my opinion, it’s really hard to believe what this White
House and the president is saying,” he told “Fox News Sunday,”
describing Friday’s difficult budget deal as “only the
beginning. This is the first bite of the apple.”

Plouffe said the budget agreement was the first major test
of the new era of divided government since Republicans took
House control in January and it showed compromise was still
possible in Washington.

But Cantor and Representative Paul Ryan, head of the House
Budget Committee and author of a Republican 2012 budget plan
that will be debated in the House this week, said they expected
another tough political fight over raising the debt ceiling.

Administration officials warn a failure to raise the debt
limit could put the United States into a debt default that
would risk global economic havoc, but Republicans said it must
be accompanied by budget reforms or spending caps.

‘GUARANTEED STEPS

“There is no way that we Republicans are going to support
increasing the debt limit without guaranteed steps being put in
place to ensure that the spending doesn’t get out of control
again,” Cantor said.

Before they get to those bigger fights, Congress this week
must approve the budget deal for this fiscal year, struck with
barely an hour to spare before Friday’s midnight deadline.

The deal prevented a shutdown that would have idled 800,000
federal workers, closed national parks and monuments and
delayed paychecks for troops in Afghanistan and Iraq.

But it left some lawmakers on both sides of the political
divide disappointed. Republican Representative Mike Pence,
popular with fiscal conservative Tea Party activists, said on
ABC’s “This Week” the deal was “probably not good enough.”

Representative Chris Van Hollen, the top Democrat on the
House Budget Committee, said he would “reserve judgment” until
he sees details but he believed the deal would pass Congress.

Plouffe said Obama, a Democrat, would not embrace Ryan’s
budget plan, which would save $6 trillion over the next decade
partly by cutting the government-run health programs for the
poor and elderly.

He agreed, however, that those programs could be part of
the long-term solution. “You’re going to have to look at
Medicare and Medicaid and see what kind of savings you can
get,” Plouffe said.

“In the process of sitting down and talking about our
spending and our programs, if there can be a discussion about
how to strengthen Social Security in the future, he’s eager to
have that discussion,” he said.

Plouffe said Republican budget proposals were forcing
seniors, the poor and the middle class to bear more than their
share of the financial burden. “If you weren’t giving enormous
tax cuts to millionaires, you wouldn’t have to do that,” he
said.

Obama agreed in December to extend for two years lower tax
rates for the wealthiest American families making more than
$250,000 a year as part of a broad agreement with Republicans.

He said at the time he wanted to revisit the issue, but
Cantor accused Obama of flip-flopping on his own tax deal.

“Right away, they are insisting we have to look at raising
taxes again, all while holding up the tax agreement that was
signed in December,” he said.
(Additional reporting by Alister Bull and Dave Clarke;
Editing by Laura MacInnis)

WRAPUP 2-Obama to offer U.S. deficit plan, more fights loom