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2011年6月30日星期四

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Efforts Intensify to Avert US Debt Crisis

Michael Bowman | Capitol Hill


US President Barack Obama answers a question during a news conference at the White House, June 29, 2011 (file photo)
Photo: REUTERS
US President Barack Obama answers a question during a news conference at the White House, June 29, 2011 (file photo)
One day after President Barack Obama urged the U.S. Congress to intensify efforts to avert a debt crisis, the Senate appears to be doing just that.  A recess has been canceled, and the president has been invited to Capitol Hill for direct talks with lawmakers.

If President Obama hoped to spark a reaction from Congress on the urgency of U.S. debt negotiations, he appears to have succeeded.  At the president's urging, Senate Majority Leader, Democrat Harry Reid canceled next week's scheduled Independence Day holiday recess.

Meanwhile, the chamber's top Republican, Minority Leader Mitch McConnell, urged a more immediate step.  "I would like to invite the president to come to the Capitol today to meet with Senate Republicans," McConnell said.

McConnell said Obama should hear a direct Republican response to Wednesday's presidential news conference, where Obama urged greater flexibility from Republicans on ways to trim the federal budget deficit.

The White House declined the on-the-spot invitation.  Press Secretary Jay Carney says the president is well-aware of the Republican stance on the budget, but he reaffirmed the president's commitment to continue negotiations.

The back-and-forth activity comes ahead of an August deadline to raise the federal borrowing limit or face a possible default on America's $14 trillion national debt.  Republicans have insisted on trimming the federal budget deficit as a condition for raising the debt ceiling.

Members of both major political parties agree that federal spending must be cut. But Democrats say they favor limited cuts in domestic spending, combined with higher taxes on the wealthy.  So far, Republicans have refused to consider raising taxes on any segment of society.

"Our problem is not that we are taxed too little.  Our problem is we are spending way too much," said Republican Senator Jon Kyl of Arizona.

Republicans say tax hikes proposed by Democrats would punish small businesses that create jobs as well as America's struggling middle class.

Democrats largely have abandoned hope of raising federal income tax rates on anyone, wealthy or otherwise.  Instead, they now advocate ending special tax breaks that benefit the well-to-do and certain corporate interests, such as the petroleum industry.

Democrats took to the Senate floor to criticize preferential tax treatment enjoyed by the richest Americans, such as accelerated tax deductions available to racehorse owners.

"Horse racing may have been called 'the sport of kings,' but that does not mean that the owners of horses, those millionaires and billionaires, need royal tax treatment," said Democratic Senator Jeff Merkley of Oregon.

New York Democratic Senator Charles Schumer took aim at interest deductions for purchasing luxury yachts.  "The deduction Congress helped create for middle class families to realize the American dream of homeownership is helping millionaires and billionaires get a 35 percent discount on their yachts," Schumer said.

Republicans counter that even if such tax breaks were eliminated, the fiscal impact would be minimal - at most, a few billion dollars from a $1.6 trillion federal deficit.  Democrats respond that the issue is one of fairness and shared sacrifice.

Senator Schumer says that if Democrats accept budget cuts to programs that benefit the poor and disadvantaged, Republicans must be willing to end tax breaks for the wealthy.  "We will not get anywhere unless both sides compromise," Schumer added.

Republicans say Democratic attempts to preserve federal spending levels and raise tax revenues will hurt an already-struggling U.S. economy and make the debt crisis even more severe.

"Who really thinks that the answer to a $1.6 trillion deficit is more deficit spending?  Where in the world does that idea come from?" asked Senator McConnell.

Allowing taxes to rise would violate a pledge many Republican lawmakers made when running for Congress.  Similarly, allowing sweeping cuts to educational programs and America's social safety net would anger core constituencies of the Democratic Party.  Both sides agree on the need to put the United States on a sustainable fiscal path.  But with only weeks to go before the federal government reaches its borrowing limit, a bipartisan debt-reduction deal shows no sign of materializing.

Report: Iraq, Afghanistan Wars Cost US Nearly $4 Trillion

A new report issued by Brown University says the cost of America’s wars in Iraq and Afghanistan - and operations in Pakistan - will cost the country nearly $4 trillion. The report's total is more than three times higher than U.S. President Barack Obama’s estimate in a recent speech.

When Obama recently announced a drawdown of U.S. troops from Afghanistan, he said America's wars have cost the country $1 trillion dollars.

But a report by Brown University’s Watson Institute for International Studies estimates the total cost at $3.7 trillion.

The study includes spending on wars in Iraq and Afghanistan, as well as operations in Pakistan. Catherine Lutz is one of the study’s co-authors.

“The reasonable estimate is approximately $4 trillion for the war, up to... today and including some of the future costs that we are obligated to pay for veterans care," said Lutz. "In addition, another $1 trillion in interest payments on the debt, we estimate will be required through 2020.”

Lutz said costs such as long-term care of wounded veterans, and projected war spending from 2012 through 2020, were included in the figures. Report co-author, Boston University Political Science Professor Neta Crawford, said other costs include lost opportunities because money was spent on war materiel.

“So if you think about the annual budget of these wars, let us say it averages $130 billion each year for the last 10 years, then you get more than 900,000 jobs in education that could have been created," said Crawford.

The human costs also are also high. The report says between 224,000 and 258,000 people have died directly from warfare, with 125,000 of them civilians in Iraq.

Even with the president’s planned drawdown of 33,000 troops, there will still be almost 70,000 troops in Afghanistan at an estimated cost of $1.2 million each.

Europe Spending Cuts Prompt Street Protests

Union members are seen during a mass group gathering in Newcastle, England, June 30, 2011,as thousands of public service workers and teachers in Britain go on strike over pension and government cuts
Photo: AP
Union members are seen during a mass group gathering in Newcastle, England, June 30, 2011,as thousands of public service workers and teachers in Britain go on strike over pension and government cuts
Demonstrations are taking place in cities across Britain as hundreds of thousands of public sector workers stage the biggest strike in years against pension cuts. On the other side of Europe in Greece, there have been more demonstrations as politicians there vote through the latest round of austerity measures. The spending cuts taking hold in many European countries could hail a summer of protests across the continent.

Europe’s debt crisis is starting to bite - and it’s bringing thousands of people onto the streets.

In Britain, teachers’ and public workers’ unions called a strike Thursday. Thousands of members joined marches against plans to increase the retirement age. Outside Westminster Abbey - where the royal wedding united the country in celebration just 2 months ago - the streets were filled with demonstrators.

“It’s not fair. We can’t be working in that kind of pressurized environment to the age of 68. I’m going to be paying twice the amount that I’m currently paying and I’ll get even less,” said a protester.

“We are not about to roll over. Bankers played dice with our futures, why are we paying for it?," said the other.

“Rather than taking what’s dished out and being like “OK”, and letting the government think that could do more, at least they understand now that people do feel about it and they’re willing to turn up en masse to show people what they think about it,” said another one.

Hundreds of thousands of people took part in the industrial action. Many of them joined one of the 80 demonstrations taking place across the country.

The strike caused long queues at ports and airports as immigration and customs staff staged walkouts. Around a third of schools across Britain were closed, while court trials were delayed.

The British government has condemned the strikes, saying people are living longer so they will have to work longer too. It’s part of a raft of spending cuts being pushed through parliament to tackle the public debt - currently running at almost $1.5 trillion, or 60 percent of GDP.

But Britain’s burden pales when compared to fellow EU member Greece.

In Athens, parliament passed a second vote on Thursday to begin implementing austerity measures worth $40 billion. It means Greece will receive the next slice of a $156 billion bailout from the EU and the International Monetary Fund. The public reaction has been hostile - polls show 4 out of 5 Greeks disapprove of the measures.

The Greek government had warned that without the bailout it would run out of money by the middle of July - with dire consequences for both Greece and the wider world economy.

Across Europe there is a common belief uniting the protestors - they say they did not cause the financial crisis, so they should not be the ones who pay for it.

Greek Parliament Approves Details of Austerity Vote

Greece's Prime Minister George Papandreou (R) talks with Finance Minister Evangelos Venizelos during a parliament session in Athens June 30, 2011.
Photo: Reuters
Greece's Prime Minister George Papandreou (R) talks with Finance Minister Evangelos Venizelos during a parliament session in Athens June 30, 2011.
The Greek parliament has approved the details of its new austerity plan, clearing the way for release of more international aid for the debt-ridden government.

Lawmakers in Athens on Thursday voted for the specific measures proposed by Prime Minister George Papandreou in his $40 billion plan to raise taxes, cut spending and sell state-owned assets. Parliament passed the broad plan on Wednesday.

With the budget details approved, the International Monetary Fund and the European Union have pledged to release a $17 billion share of the $156 billion bailout Greece secured last year.

The new funding will provide cash for the government to operate and pay debts until mid-September. Greece also expects to seek additional international help, another bailout of about the same size as last year's.

The austerity plan has drawn wide protests in Greece, and police clashed for a third day Thursday with demonstrators near the parliament building. Several hundred protesters and police were injured on Tuesday and Wednesday as worker unions declared a strike, bringing the country to a virtual standstill.

Government austerity plans also brought a large protest in Britain on Thursday, as thousands of teachers and civil servants went on strike to protest Prime Minister David Cameron's proposal to cut the number of civil servant jobs and benefits for workers.

The British government has proposed cutting $130 billion from public spending to reduce its deficit. The state pension age would be increased from 65 to 66, workers would have to contribute more toward their pensions and retirement payouts would be reduced.

Mr. Papandreou won the Wednesday vote in Greece by a larger-than-expected margin, 155 to 138. He had ardently campaigned for approval of the plan, imploring parliament to do everything to avoid default.

Key European leaders praised the Greek legislative action on Wednesday. The president of the European Council, Herman Van Rompuy, and the president of the European Commission, Jose Manuel Barroso, had said the second favorable vote Thursday would lead to disbursement of the $17 billion from last year's bailout.

Many protesters feel the $40 billion austerity plan will impose harsh penalties on workers and pensioners, while sparing the wealthy. EU officials had warned that Greece had no choice but to adopt the austerity plan.
(Source: VOA)

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