Belfast Telegraph

Obama to take US further into debt

US President Barack Obama has a budget plan that forecasts the government spending a record $1.66 trillion more than it takes in through taxes.

Mr Obama blamed the huge deficit on the decisions of President George Bush, previous Congresses and his administration's steps to prevent an economic collapse.

The president said in normal circumstances he would have worked to pay down the yearly deficit immediately, but costly steps were needed to help an economy in freefall.

He asked politicians to follow his lead on reducing waste and to avoid ‘grandstanding’.

The budget proposal reflects, as well, pressure on Mr Obama ahead of the November congressional elections to cut unprecedented growth in the US debt.

Mr Obama and the Democrats are trying to regain their political footing after the upset of losing the Massachusetts Senate seat long held by the late Senator Edward Kennedy. That vote cost them their supermajority in Congress and appears to have indefinitely stalled efforts to pass health care reform legislation.

In the meantime Mr Obama pledged in his State of the Union address last week to make job creation his top priority.

After a protracted battle on health care dominated his first year in office and led to a string of Democratic election defeats, the administration hopes its new budget will convince Americans the president is focused on fixing the economy.

The $3.83 trillion budget includes a huge tranche to lower double-digit unemployment — about $100bn in tax incentives to hire workers and improve the nation's infrastructure and energy sector.

The spending jump will be partially offset by higher taxes on wealthy Americans existing tax cuts expire. Mr Obama also seeks an overall freeze on the portion of government spending excluding commitments for Social Security and health care for the elderly as well as defence and homeland security.

As written, the spending plan's $1.56 trillion in red ink surpasses last year's then-record $1.41 trillion gap. It reflects a continuing flood of government spending designed to ease the Great Depression of the 1930s.

Belfast Telegraph