Republicans set 2012 budget battle with Obama

Republicans in the House of Representatives united on Friday behind a 2012 budget plan slashing trillions of dollars in government spending while cutting taxes -- two achievements conservatives say are necessary ingredients for a deal to raise the U.S. debt limit.

The vote effectively serves as the Republicans' opening gambit in what are likely to be contentious negotiations with President Barack Obama and his Democrats over debt and deficits in the coming months. The Congress must decide within weeks on raising the $14.3 trillion debt ceiling.

By a vote of 235-193, the House passed the plan written by House Budget Committee Chairman Paul Ryan for the 2012 fiscal year beginning October 1.

Democrats rejected the measure, which proposes slashing spending by nearly $6 trillion over a decade and reducing benefits for the elderly and poor. All but four Republicans supported it.

There is almost no chance of the Senate approving the measure in its current form.

The White House swiftly condemned the measure but said it was committed to working with Republicans to bring down record deficits that all sides acknowledged imperil the country's economic future.

"Though our approaches differ, our goal remains the same," White House spokesman Jay Carney said in a statement that was more conciliatory than Obama's sharply political attack on Ryan's plan in a deficit-cutting speech earlier in the week.

The two parties are offering competing visions of America's fiscal future.

"Yesterday we cut billions, today we cut trillions," said Kevin McCarthy, the third-ranking Republican in the House.

He was referring to the passage on Thursday of a bill that funds the government through September 30 but at the same time cuts government spending by about $38 billion. Obama signed the bill into law on Friday.

Republicans have made clear their support for raising the debt ceiling, which must be done by July 8 at the latest, is contingent on substantial progress toward reducing the $1.4 trillion annual deficit.

In coming weeks, the Treasury Department estimates it will hit its $14.3 trillion limit on borrowing.

Obama acknowledged on Friday that a compromise on spending cuts would be needed to get the necessary support in Congress to raise the U.S. debt ceiling, while warning that the world could plunge into a new recession if the United States were to default on its debt.

THE REPUBLICAN BUDGET PLAN

Central to the Republican 2012 budget are deep reductions in domestic spending coupled with cutting the top corporate and personal tax rates to 25 percent, down from 35 percent.