Does Obama blueprint reduce budget deficit fast enough? (+video)
US budget deficit, which has hit $1 trillion for four straight years, would fall to $900 billion in 2013, under Obama's budget blueprint released Monday. It is slated to keep falling, but even by 2018 would barely satisfy credit-rating firms.
President Obama proposed a federal budget plan Monday that would avoid tax hikes on most Americans, but that leaves his administration open to criticism that it is moving too slowly to tame massive annual deficits.Skip to next paragraph
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The Obama plan for 2013 and beyond calls for federal spending to fall from currently projected levels, and for taxes to rise for high-income households. But the White House also argues that trying to reduce US deficits too fast would harm a still-tentative economic recovery.
If enacted, the budget as envisioned by the president would result in a federal deficit of $901 billion in the 2013 fiscal year (which begins in October), after deficits above $1 trillion during each of the previous four years. The deficit would fall from 5.5 percent of gross domestic product in 2013 to 2.7 percent of GDP in 2018, the White House projects.
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Even in 2018, that would barely bring the deficit into a range that credit-rating firms view as tolerable, for the US to maintain a strong rating on its public debts. It would leave the nation vulnerable if the economic performance doesn't match Mr. Obama's expectations over the next few years, or if, as many forecasters expect, the cost of health-care entitlements grow quickly after 2018, as the baby-boom retirement wave gathers momentum.
The White House budget document is both a road map of presidential priorities – calling for boosts in some education, transportation, and energy programs while cutting military spending – and an election-year political statement. It's not expected to pass a politically divided Congress, but Obama and his team say it takes a "balanced" approach to deficit reduction and economic growth that differs sharply from Republican visions.
"I think there is pretty broad agreement that the time for austerity is not today," said Jacob Lew, Obama's chief of staff, said in TV appearances Sunday, according to the Associated Press. "Right now we have an economy that's taking root.... Austerity measures right now would take the economy in the wrong way."
In his radio address Saturday, Obama called on Congress to extend a key part of his program for US job growth: a temporary payroll-tax cut (due to expire at the end of February) to boost the economy by keeping more income in workers' pockets. On Monday, as the budget document was being relayed to Congress, Obama pitched more funding to help community colleges boost the job skills of American workers.
"At a time when our economy is growing and creating jobs at a faster clip, we've got to do everything we can to keep [recovery] on track," Obama said at a community college in Annandale, Va. Businesses are looking for the workers with the best skills, he said, and "I don't want them to find them in India or China."