Taxes, Federal Budget | featured news

The wrangling of President Barack Obama and congressional Republicans over the federal budget underscores a clash of core philosophies about how the economy works that supersedes any skirmish on taxes or spending cuts.

President Barack Obama offered strong praise Tuesday for a deficit reduction plan put together by a bipartisan group of senators, calling the measure's mix of tax hikes and spending reforms "broadly consistent" with his own approach to the current debt ceiling crisis.

President Obama meets with Senate leaders, but no one wants to back away from tough stances on taxes. Debt-reduction talks between congressional leaders and the White House entered a crucial phase Monday, with no clear framework for resolving the deadlock over taxes and spending and a deadline for a potential federal default fast approaching.

Republicans planned sharp cuts to foreign aid and education on Wednesday, while Democrats weighed a tax hike on millionaires, highlighting the yawning divide between the two parties in the budget debate.

A federal shutdown looming Friday would stop processing of paper income tax filings to the IRS – at the height of tax season – and throw into question how cargo will be processed at the nation’s ports of entry and whether new claims for Social Security benefits will be authorized.