Obama pledges to halve US deficit by 2013

February 24th, 2009 - 1:05 pm ICT by IANS  

Washington, Feb 24 (IANS) Blaming exploding healthcare costs for a rising federal deficit, US President Barack Obama has pledged to cut the nation’s $1.3 trillion deficit to half by the end of his first term.

Meeting with the congressional leadership of both parties, as well as a range of business, academic, financial and labour leaders, Obama Monday warned that the US cannot continue its current rate of deficit spending without facing dire economic consequences.

“I refuse to leave our children with a debt they cannot repay,” he said, opening a one-day bipartisan “fiscal responsibility summit” at the White House to discuss ways to restore fiscal stability without deepening the recession.

“We cannot and will not sustain deficits like these without end… We cannot simply spend as we please.”

The US, Obama argued, is already starting to face the consequences of greater deficit spending, noting that roughly one in 10 taxpayer dollars in 2008 went toward paying $250 billion in interest on the national debt.

The president pledged to take the first step toward fiscal responsibility by, among other things, ending “accounting tricks” such as refusing to include money for expenses such as the Iraq war or natural disasters like Hurricane Katrina in the regular budget.

Obama intends to cut the federal deficit in half primarily by spending less on the war in Iraq, raising taxes on those who make more than $250,000 a year and streamlining government, CNN said citing an administration official.

His budget proposal will project that the estimated $1.3 trillion deficit inherited from the Bush administration will be halved to $533 billion by 2013, or from 9.2 percent of the gross domestic product to 3 percent, the official said.

But Obama’s plans to cut the deficit may be complicated by the continuing economic downturn, which threatens to reduce tax revenues, analysts said.

A group of leading economists is now forecasting a far deeper and more painful recession ahead in the first half of the year, with a solid recovery not taking hold until 2010.

The US economy is likely to decline at a five percent rate in the first quarter, even sharper than the 3.8 percent drop recorded in the fourth quarter of last year, according to a survey of 47 top forecasters from the National Association of Business Economics.

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