<p>President Obama sets terms for budget debate, promising battle</p>

American investors who have enjoyed a short break from the financial squabbling in Washington, D.C. are about to receive a fresh dose of “debate,” as the deadline for the sequester is quickly approaching. Set to kick in on March 1, the billions of dollars worth of domestic and defense spending cuts could pose serious problems for the nascent recovery still taking place in the U.S. economy.

Speaking to reporters on February 3 and again on February, President Barack Obama outlined a number of provisions he would like to see.

“We’ve also seen the effects that political dysfunction can have,” he said during the press conference. “We’ve made progress. and I still believe we can finish the job with a balanced mix of spending cuts and more tax reform.”

Complicating President Obama’s efforts is the debt-ceiling law was passed in late January, which suspended the limit but required a budget proposal to be submitted in both chambers of Congress by April 15. According to The Hill, a Washington, D.C.-based news source, GOP leaders are also in talks to advance a bill that would require the federal government to produce a budget that balances the national budget within 10 years. 

Democratic Majority Leader Harry Reid echoed the president’s sentiments, saying that, “We need to keep our eye on the prize and continue doing something about spending, but I think that what we need to do is do some of the things that Mitt Romney talked about.”

While these initial olive branches to House Republicans are certainly encouraging, it remains to be seen how the debate will play out on Capitol Hill. Following the slight decline in economic growth from the last quarter of 2012, the stakes appear to be as high as ever. 

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