What is the president’s budget?
Every year, the White House releases its blueprint for taxes and spending by the US government. It offers an extensive and detailed look at the administration’s fiscal and economic policy priorities, and provides the basis for budgetary negotiations in Congress. Yet in many ways it is just a lengthy wish list. Lots of the proposals will never be approved by lawmakers.
What is the US fiscal outlook?
Pretty grim. The budget deficit in the 2011 fiscal year, ending in September, is set for a record high of $1,650bn on the back of the costly Bush tax-cuts compromise approved in December. This fiscal gap will start to decline, but not quickly. In 2012, it would still be $1,100bn, and it would take until 2015 to reach a palatable 3.2 per cent of gross domestic product. But an ageing population and cost of entitlement programmes such as Medicare would start pushing up deficits again in the longer term, and the national debt burden – already above $14,000bn – would continue growing.
So where is Barack Obama cutting?
This year’s budget includes $1,100bn in deficit reduction over 10 years. Without tackling the politically explosive entitlements, two-thirds of the savings will come from domestic discretionary spending. Many agencies will see a spending freeze, and some programmes will be cut, including grants for community organisers, and funding for a clean-up of the Great Lakes. Mr Obama is also proposing to raise taxes by limiting deductions and tax breaks for wealthy people and oil and gas companies.
Where is he spending?Congressional Republicans deride the White House for it, but Mr Obama wants extra funds to invest in infrastructure such as high-speed rail, as well as education and clean-energy technology. He sees this as necessary to boost the nation’s long-term competitiveness.
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