Obama vows to halve budget deficit by term’s end

February 24th, 2009 - 3:45 am ICT by IANS  

Barack ObamaWashington, Feb 24 (DPA) US President Barack Obama Monday promised to halve the country’s ballooning federal budget deficit by the end of his four-year term in office, despite a deepening recession that has forced his administration to spend record amounts of money.
Obama, who took office in January, inherited a 2008 budget deficit of $1.3 trillion. That figure could top $2 trillion - more than 10 percent of US gross domestic product - in 2009 in an effort to halt the country’s disastrous economic slide.

While such record deficit spending was necessary in the “short-term”, Obama said the world’s largest economy “cannot and will not sustain deficits like these without end”.

“I refuse to leave our children with a debt that they cannot repay,” he said in opening a so-called Fiscal Responsibility Summit at the White House, which brought together politicians, economists and business leaders.

The new pledge comes after Obama last week signed an unprecedented $787-billion economic stimulus package to help jump-start the flagging US economy. That followed a separate $700-billion financial bail-out last October to shore up the nation’s struggling banks.

The massive spending spree has drawn the ire of many conservatives. Obama hopes to assuage some of their concerns this week with a series of events focusing on the longer term efforts to cut government spending.

Obama will unveil the details of his 2010 budget and beyond in a speech before a joint session of Congress Tuesday night and in a written outline to legislators Thursday.

The administration has promised to cut wasteful government programmes and roll back tax cuts for the wealthy that were enacted under former president George W. Bush.

Fulfilling the new budget promise will also require Obama to rein in spiralling health care and retirement costs that have frustrated past administrations. The summit Monday brought together policy experts and politicians in an effort to begin that conversation.

Obama also urged states to spend the government’s money wisely during a meeting earlier Monday with the country’s governors at the White House. The president said he was relying on states to quickly implement the stimulus funds to boost employment.

“We are addressing the greatest economic crisis we have seen in decades by investing unprecedented amounts of the American people’s hard-earned money,” Obama said. “And with that comes an unprecedented obligation to do so wisely, free from politics and personal agendas.”

Vice President Joe Biden has been tasked with overseeing how the emergency funds are spent, Obama said. The administration hopes the stimulus will save or create 3.5 million jobs over the next two years. More than 3.6 million jobs have been lost since the US went into recession in December 2007.

About $15 billion from the $787-billion economic recovery package will be available to states as early as Wednesday to combat serious budget shortfalls in health care, Obama said. Hundreds of billions of dollars will begin flowing over the coming months.

Most of the country’s 50 states have clamoured for federal aid to plug budget holes totalling about $350 billion nationwide.

But some Republican governors have strongly opposed Obama’s rescue package and are refusing to accept a portion of the funds. They worry that a temporary extension of unemployment benefits, for example, could force them to increase taxes once the federal cash injection runs out.

Unlike the national government, US states are required by law to balance their budgets, forcing many to cut government benefits just as a deepening recession has increased demand for those services.

Tags: , , , , , , , , , , , , , , , , , , ,

Posted in Business |