Obama abandons moon travel for job creation
‘We can’t go on spending as if deficits don’t have consequences’ says Obama, presenting his budget
President Obama's new-found emphasis on job creation is taking shape: a proposed $3.8 trillion budget for 2011 places $100 billion toward stimulus spending to help create employment for the full ten per cent of the US workforce now out of work.
In addition, he's set to impose higher taxes on the wealthy, crack down on offshore tax cheats, both corporate and individual, and kill programmes ranging from returning man to the moon to additional spending on the highly advanced F-22 fighter.
Obama's budget represents an ideological turnaround for a president who has largely been forced to adopt his predecessor's lead in areas of economic and foreign policy. It may also be proof that the administration is both genuinely willing to tackle the long-term prospects of the US economy and genuinely alarmed that November's mid-term elections could be a decisive public rebuke of Obama's leadership.
Obama himself says the US budget "reflects the serious challenges facing the country. We're at war, our economy has lost 7 million jobs over the last two years, and our government is deeply in debt after what can only be described as a decade of profligacy. We simply cannot continue to spend as if deficits don't have consequences."
Astonishingly, the US budget is now more than twice what it was in 2001 and will register a record shortfall of $1.6 trillion this year - a sum that's only 300 billion short of the entire 2001 US budget of $1.9 trillion.
"We're in territory that's essentially uncharted waters," says James Poterba, president of the National Bureau of Economic Research, referring to falling tax revenue combined with increasing public health and pension obligations. "The long-term prospect in US fiscal policy is rather daunting."
Obama hopes to raise an extra billion by hiking taxes on individuals earning more than $250,000. Levies imposed on 50 of the biggest financial firms should raise another $90 billion; eliminating tax breaks for fossil-fuel industries is estimate to produce another $40 billion.
One of the budget's far-reaching components is a plan to force multi-nationals who avoid US taxes to pay a surcharge that should raise a further $122bn.
But with the US economy expected to grow nearly three per cent this year and four next, administration officials are hopeful Obama's budget is a strong step toward fiscal responsibility. Not that Republicans will recognise it as such. Republican leader John Boehner dismissed it simply as "more reckless spending and more unsustainable debt". ·
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