Obama seeks to create jobs, cut deficit in 2011 budget
- Published: 1/02/2010 at 07:53 PM
- Online news: World
US President Barack Obama will on Monday project a record deficit of 1.556 trillion dollars this year, in a 2011 budget designed to both create jobs and curb bloated long-range fiscal shortfalls.
A jobseeker looks at job listings in San Francisco, California in August 2009. US President Barack Obama will project a record deficit of 1.556 trillion dollars this year, in a 2011 budget designed to both create jobs and curb bloated long-range fiscal shortfalls.
The budget the White House will send to Congress at 10:00 am (1500 GMT) includes a three-year freeze on non-security discretionary spending, a 100 billion dollar jobs package and extra education and homeland security spending.
It foresees a record, and higher than expected deficit of 1.556 trillion dollars in 2010, falling to 1.267 dollars in 2011, and abandons a US bid to send men back to the moon, by ending the Constellation space vehicle program.
The Obama administration said the 2011 budget is aimed at dealing with the aftermath of the financial, fiscal, housing and unemployment crises, and to put the United States on a path to long-term economic security.
"This budget embodies the president's efforts to deal with all those situations," said Obama's communications director Dan Pfeiffer, who said the budget contained "tough choices" in a bid to curb spending.
The budget will also set the battle lines for the political debate in the run-up to mid-term congressional elections in November, in which Obama's Democrats, paying the price for high unemployment, fear heavy losses.
Republicans are trying to brand Obama as a big-spending liberal, but the administration says new growth figures last week showing a 5.7 percent expansion in the economy in the past quarter prove his policies are working.
The administration says that the deficit will stand at 1.267 trillion dollars in 2011, which will represent 8.3 percent of Gross Domestic Product, compared to 10.6 percent of GDP in 2010.
Republicans and some conservative Democrats have raised the alarm at high government spending, which has swelled the deficit, and the issue has been a source of considerable political pressure for Obama.
But some analysts warn it is too early to focus on cutting deficits and fear the tactic risks slowing the spending needed to stimulate the economy and generate jobs.
Obama's budget chief Peter Orszag told reporters that the administration thought it had the balance right, between spurring recovery and making a start of trimming deficits which pose a grave long-term economic threat.
"Federal spending is a little like an aircraft carrier, you have to start turning the ship well ahead of time," he said.
The 2011 budget contains more than 300 billion dollars in tax cuts for families and businesses over the next 10 years and includes 120 terminations of programs and savings of 20 billion dollars.
"One of the key things we are focusing on, is jump-starting job creation," said Orszag, who heads the president's Office of Management and Budget.
To that end, there is 100 billion dollars for job-creating investments in small businesses, tax cuts and clean energy, designed to start bringing down the current 10 percent unemployment rate.
The budget will extend tax cuts for working families, eliminate the capital gains tax on small businesses and allow tax cuts introduced by former president George W. Bush to expire for people earning more than 250,000 dollars a year.
As the administration combines a push for green energy development with deficit cutting, the budget will phase out fossil fuel subsidies for oil, gas and coal companies to raise 40 billion dollars over 10 years.
Following the thwarted bid by an Al-Qaeda affiliated group in Yemen to bring down a US airliner on Christmas Day, the budget also makes new investments in US security.
The Homeland Security Department gets a two percent funding raise to 43.6 billion dollars, which will include money to deploy of 1,000 new imaging technology screening machines and explosives detection equipment at airports.
The budget will also provide funding for more federal air marshals on international flights in a bid to ward off future attacks, the officials said.
The cost of US military operations overseas, including in Afghanistan and Pakistan, are put at 159.3 billion dollars in 2011 while the administration will make a supplemental request for 2010 of 33 billion dollars to cover war spending.
The State Department also gets a funding increase -- up 2.6 percent from the president's funding request in 2010.
Officials denied that Obama had taken a "hatchet" to government spending, saying he had gone "line by line" in a "scalpel-like" approach to weeding out waste and costly programs.
The freeze on non-security discretionary spending is projected to save 250 billion dollars over 10 years.
The budget will be accompanied by Obama's call for a bi-partisan Fiscal Commission to identify deficit cutting policies over the long term and to balance the budget.
About the author
- Writer: AFP News agency
- Position: Agence France-Presse
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