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Barack Obama speaks to visitors at the Lincoln Memorial on the National Mall in Washington on Saturday, the night after Republicans and Democrats struck a budget deal to avoid a government shutdown. Manuel Balce Ceneta/AP

Obama to prepare plan for US's long-term deficit reduction

After averting a shutdown with a short-term agreement, the White House is now focussing on brokering a bigger budget deal.

US PRESIDENT BARACK Obama is turning his attention to more long-term economic planning, in the wake of Friday’s dramatic late-night resolution to a longstanding budget standoff.

The Washington Post reports that Obama will try to strike a deal with the opposing Republican Party by scaling back some of his own Democrats’ major policy initiatives – offering to cut spending on the means-tested Medicaid health coverage plan, for example – while also proposing to hike taxes on the better-off.

The developments come a few days after members of both parties agreed to a deal that cut $38.5bn (€26.6bn) in federal spending, first extending the previous funding arrangements for another week before signing off on the revised package of cutbacks.

That deal staved off the immediate prospect of a federal shutdown, where the existing budgets for major federal institutions would have expired and left those institutions with no choice but to close down until further funding was agreed to.

Senior White House advisor David Plouffe – who managed Obama’s presidential campaign in 2008 – said the president would address the nation this Wednesday to outline more long-term proposals, taking a “balanced approach” that would use a “scalpel, not a machete”.

Though last week’s agreement has shelved any short-term concerns about the future of the national institutions, the fact that the national debt is approaching the $14,300,000,000,000 limit means the government will be forced either to cut spending on a further dramatic scale or to increase the debt ceiling stated in law.

Another major difficulty for Obama is that because the two houses of congress are dominated by differing parties, a major bipartisan agreement would be required for any budget measures to be passed by both houses before Obama could have a chance to sign them into law.

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