Republicans are worried about US national debt levels and want greater curbs on spending. The party’s leaders have ruled out highly controversial cuts to medical and social security programmes but US foreign aid as well as food assistance and housing initiatives for the poor could be targeted for reductions.
On Wednesday the head of the Federal Reserve – the central banking system of the US – warned Congress that it must raise the debt ceiling to avoid an unprecedented default. Treasury secretary Janet Yellen said in January this practice would allow the government to get by financially, at least until the beginning of June.
It suggested that the economy could plunge into a “mild” recession and the unemployment rate could jump from the current low of 3.4 per cent to almost 5 per cent. He had previously suggested making cuts of about $2 trillion when he gave his state-of-the-union address to the US Congress last month. The president stated on Twitter on Wednesday: “This week, I’ll show Americans my full budget vision to invest in United States, lower costs for families, and grow the economy without raising taxes on anyone making under $400,000.”