US President Barack Obama unveiled his 2012 budget yesterday, describing the proposal as a ‘down payment’ on future cuts to the US budget deficit.
The budget aims to cut $1.1tn (£690bn) from the US deficit over a decade. a lot of it from wage cuts, cuts in Medicaid and Medicare and Federal job cuts.
Obama said the US must live within its means and called for cuts.
His budget proposal envisages total spending of $3.73tn in the 2012 budget year, which begins in October. That is a 2.4 per cent reduction from the current year.
The budget calls for a five-year overall freeze in domestic non-defence spending, reducing that spending as a share of the economy to the lowest level since the 1950s, Obama said.
That would amount to about $400bn in reduced spending over the next decade.
Included among the programmes slated for cuts are:
• Development grants for poor neighbourhoods.
• A roughly 50 per cent cut in heating bill assistance to poor families, saving $2.5bn.
• A 25 per cent cut to programmes for environmental conservation of the Great Lakes, saving $125m.
• Raising $46bn over 10 years through elimination of tax breaks to oil, gas and coal companies.
The US is one of only two G20 countries which expects its deficit to rise, not fall, this year. The deficit is predicted to increase to $1.645tn in the 2011 financial year, then drop to $1.1tn in 2012.
If this was achieved it would cut the deficit as a share of the US economy to 3.2 per cent by 2015 from 10.9 per cent this year.
