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President Obama hits the road to spread his economic message

By the CNN Wire Staff
  • NEW: Vice President Biden sets budget talks with legislators for May 5
  • The president heads to Virginia, California and Nevada this week
  • Obama will hold town hall-style meetings to discuss fiscal policy
  • The message campaign comes as Congress faces budget, debt ceiling issues

Washington (CNN) -- President Barack Obama takes his deficit reduction proposal on the road this week with town hall-style events in three states that are important to his re-election bid in 2012.

Obama heads to northern Virginia on Tuesday; Facebook headquarters in Palo Alto, California, on Wednesday; and Reno, Nevada, on Thursday to take questions on the economy and his plan, unveiled last week, that would end Bush-era tax breaks for the wealthy and cut spending.

On Monday, Obama kick-starts the message campaign by giving interviews at the White House with local news stations in Denver; Raleigh, North Carolina; Dallas and Indianapolis.

"I hope you'll take a break from either friending or defriending each other" to RSVP for the Wednesday event, which will be live-streamed to "answer questions from folks across the country," Obama said in a video invitation posted Monday on YouTube.

The president's blitz comes as Congress faces two major fiscal issues in coming months: passing a budget for fiscal year 2012, which begins October 1, and raising the federal debt ceiling so the government can continue meeting its obligations.

It targets two traditional Republican states he won in 2008 -- Virginia and Nevada -- as well as reliable Democratic territory in California and its 55 electoral votes, the most of any state.

Media bias in budget battle?

Congressional Republicans are demanding significant fiscal reforms, such as a balanced budget amendment and mandatory spending caps, in exchange for their necessary support to raise the debt limit.

Democrats respond that the debt limit issue should be separated from any politically inspired fiscal mandates because any question of whether the government can pay its debt will bring damaging repercussions from markets and the international community.

The first evidence of such a reaction came Monday, when Standard & Poor's lowered its outlook for the nation's long-term debt.

While reaffirming its top-tier rating for the U.S. economy, S&P lowered its outlook for America's long-term credit rating to "negative" from "stable" based on the uncertain political debate around the nation's fiscal problems. It said resolution of major issues was unlikely ahead of the 2012 elections.

The report by one of the major agencies that evaluates debt ratings sent stocks tumbling, with the Dow Jones industrial average sinking 140 points on the day.

House Majority Leader Eric Cantor, R-Virginia, said Monday that the S&P report underscores the need for immediate reforms to ensure America's fiscal health.

Republicans will not move forward on a measure to raise the country's debt ceiling unless "it is accompanied by serious reforms that immediately reduce federal spending and end the culture of debt in Washington," Cantor said in a statement.

At the White House, Press Secretary Jay Carney said that although the S&P rating showed the need for agreement on deficit reduction, the president believes that the prospects for a deal are better than expected by S&P.

He reiterated the White House position that raising the debt ceiling should be handled separately from fiscal reform measures.

"The issue is, the debt ceiling has to be raised, and it cannot be held hostage to a process that is very difficult and very complicated," Carney said. "We cannot make it conditional."

Calling the possibility of a U.S. default on its debt obligations "unthinkable," Carney said congressional leaders from both parties have indicated that the debt ceiling will be raised and said Obama "takes them at their word."

While opposing a direct linkage between raising the debt ceiling and fiscal reforms, the White House concedes that simultaneous steps are needed to reduce mounting deficits and the national debt.\

The U.S. debt is expected to hit the country's $14.294 trillion ceiling next month, though congressional leaders say the Treasury can take steps to put off the deadline until early July.

On the broader fiscal reform issues, Obama and congressional Democrats seek to distinguish their policies from Republican calls for shrinking spending and the size of government.

A 2012 budget proposal passed Friday by House Republicans with no Democratic support would cut $4 trillion in spending over the next decade by overhauling the Medicare and Medicaid government health care programs, cut non-military discretionary spending and reform the tax code to lower rates and eliminate loopholes.

The goal is leaner government without the unsustainable cost increases currently plaguing Medicare and Medicaid, along with lower tax rates to stimulate economic growth.

Democrats call the GOP plan unbalanced, saying it gives the wealthy tax breaks while placing the burden of reduced spending on the most vulnerable elements of society.

Obama's vision, unveiled last week, also seeks $4 trillion in deficit reduction but over 12 years, and includes tax reforms to lower some rates and eliminate loopholes while ending Bush-era tax cuts for families earning more than $250,000 a year.

The president also called for further reforms to Medicare and Medicaid while maintaining their current structure, along with spending cuts, including the military budget. The House Republican plan would leave military spending untouched.

Vice President Joe Biden's office announced Monday that his first meeting with legislators to try to work out a fiscal reform deal will take place May 5. Obama proposed the talks when he outlined his policy last week, but the composition of the House and Senate delegations remains uncertain.

CNN's Tom Cohen contributed to this story.