Obama economic speech to fire first salvo in new budget fight

President Obama will deliver the first in a series of economic speeches Wednesday aimed at gaining the upper hand in this fall’s looming budget showdown with Congress.

Obama will speak at Knox College in Illinois, the same location where he first outlined his economic vision as a Senate candidate in 2005.

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Senior Obama adviser Dan Pfeffier told reporters in an email Sunday that Obama wants to steer Congress away from “phony scandals” and to prioritize economic benefits for the middle class in the looming budget wars.

Congress is deeply divided over whether to leave $109 billion in annual automatic budget cuts in place and will have to find a way to resolve their differences to avoid a government shutdown on Oct. 1.

Lawmakers will also have to find a way to raise the $16.4 trillion debt limit by November at the latest. Obama wants a clean increase but Republicans are demanding more spending cuts in exchange for raising it. 

“Why now? Well, we've made important progress with the Senate passing comprehensive immigration reform and will continue to work with the House to push to get that enacted into law. But the President thinks Washington has largely taken its eye off the ball on the most important issue facing the country,” Pfeffier wrote.  

“Instead of talking about how to help the middle class, too many in Congress are trying to score political points, refight old battles, and trump up phony scandals,” he added.

Republicans have been focused on investigating the killing of U.S. Ambassador Chris Stevens in Benghazi, Libya last year and examining Internal Revenue Service harassment of Tea Party groups—something Obama has condemned and the White House denies involvement in. 

Pfeiffer looked ahead to the looming budget fight, writing “in a couple of months, we will face some more critical budget deadlines that require Congressional action, not showdowns that only serve to harm families and businesses -- and the President wants to talk about the issues that should be at the core of that debate.”

The budget standoff has been at a low boil for months as Senate Democrats have tried to force House Republicans into a budget conference while highlighting the consequences of sequestration. 

The House GOP has not focused on the debt ceiling in weeks and will likely develop its approach after the August recess according to aides.  

Next week, the Senate will take up the first of its 12 annual appropriations bills that together come in with $91 billion more in spending than the House envisions for fiscal 2014. The large difference has most experts predicting a temporary stopgap spending measure to keep the government open after September.