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Budget battle just beginning

From the CNN Political Unit
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Ryan: Obama 'poisoning wells' with plan
STORY HIGHLIGHTS
  • GOP and Democratic negotiators have worked out a deal on the current fiscal year's budget
  • So you won't hear the term "government shutdown" until at least the end of September
  • 2012 spending proposals present tough choices about the country's debt crisis
  • Expect more rhetoric as Democrats, Republicans debate health care, politics, taxes

(CNN) -- Republican and Democratic negotiators last week worked out a deal on a budget for the current fiscal year, which is half-over. The deal cuts nearly $40 billion from from the original budget plan.

Negotiators had been at it since last year, passing seven continuing resolutions to keep the government funded while they worked out their differences.

Getting the overdue 2011 budget behind it, Congress now begins work on 2012 spending plans, which promise to be a bigger fight because of tough choices that have to be made about the country's debt crisis.

The House passed legislation funding the government for the rest of the fiscal year Thursday.

House passes budget deal despite GOP defections

What's likely to happen: The 2011 budget is expected to go to the Senate, which is also expected to pass it. Sen. Rand Paul, a Kentucky Republican who was one of the first big scores for the Tea Party in last year's midterm elections, had threatened to filibuster the bill in the Senate because the cuts weren't deep enough, but he backed down.

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Who won, and who lost? President Obama was able to spare some of his initiatives from budget cutters and protect some traditional Democratic social issues from ax-wielding budget cutters.

Republicans were demanding nearly $60 billion in cuts and settled for two-thirds of that.

The vote on the bill could be a measure of whether House Speaker John Boehner of Ohio won or lost -- the deal he struck with Democrats last Friday wasn't popular with the Tea Party-backed part of his caucus, and it will be interesting to see how many of them vote against it.

What it means for you: You won't hear the term "government shutdown" until at least the end of September, when the current fiscal year ends.

Besides that, you won't feel much effect -- many of the "cuts" were actually unspent funds that were moved from one page of the books to another. And the federal government keeps humming along and piling up debt, which brings us to ...

The bigger budget battle

Obama presented his debt reduction plan Wednesday, a week after Republicans had unveiled theirs. Both are frameworks or blueprints, with the details to be filled in later.

The Republican plan looks to trim the nation's $14 trillion debt through cutting spending and overhauling Medicare and Medicaid -- government health programs for the elderly and poor -- and creating a voucher system.

Critics say it robs from the poor to pay the rich.

With his plan, Obama draws a line on Medicare and Medicaid reform, saying he won't allow anything to weaken those programs and instead wants to end the Bush-era tax cuts for the wealthiest Americans.

Critics say Obama's plan maintains the Democratic status quo and continues to push problems off on future generations.

What happens next: Lots of rhetoric.

Obama fired the first shots Video while presenting his plan, saying that the Republican blueprint seeks to have old folks pay more for their health care to provide for more tax breaks for the wealthy.

Rep. Paul Ryan, the House Budget Committee chairman who wrote the Republican plan, characterized Obama's announcement as a "political broadside" that will "poison wells" for any negotiations. Ryan said that Obama is more interested in re-election than solving the debt problem Video.

Obama dispatched Vice President Joe Biden to Capitol Hill to get a deal done by June. Unfortunately, Biden appeared to be sleeping during that part of Obama's announcement Video, so hopefully someone told him what he missed.

What's likely to happen: Who knows? The two plans draw some pretty thick ideological lines. But even some activists in the Tea Party, which helped shape the conversation on debt reduction, admit that big changes to Medicare and Medicaid will be a tough sell to some members of the movement.

In May, the government will hit its debt ceiling Video, meaning it cannot borrow any more money unless Congress votes to raise what amounts to the country's credit limit. Republicans say they won't vote to raise the debt ceiling without promises of significant spending cuts.

So that sets up a battle within another, with the beginnings of the 2012 presidential campaign.

What it means for you: Hard to tell. If the debt ceiling isn't raised, the U.S. can't meet its financial obligations.

Here's how each side presents its rhetoric:

If Republicans have their way, they'll save billions in health care costs and the lesser tax burdens on corporations; their plan will spur the economy; and the deficit will be reduced by a quarter or so in 10 years.

If Democrats are able to get their plan passed, Grandma and Grandpa won't have to worry about paying rich people's taxes, rich people will pay more of a share in cutting the nation's debt, and the deficit will be reduced by a quarter or so in 12 years.

Or maybe Sen. Harry Reid can rekindle those warm feelings Video he had for Boehner as the clock neared midnight Friday and they can work something out.

 
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