Obama budget curbs US deficit

 
City A.M. Reporter
President Barack Obama has proposed a budget that would cut the US deficit by $1.1 trillion (£687bn) over ten years, setting the stage for a bitter fight with Republicans who vow even tougher spending controls.

Conservatives claim Obama, a Democrat, is a tax-and-spend liberal, and they aim to make the 2012 presidential election a referendum on his fiscal track record.

Details of the budget proposal provided by the White House before its official release showed the deficit rising to $1.645 trillion in fiscal 2011, then falling sharply to $1.101 trillion in 2012.

This trend would trim the deficit as a share of the US economy to 3.2 per cent by 2015 from 10.9 per cent this year.

Obama's budget for fiscal 2012, to be formally released at 15:30 today, is a proposal to Congress laying out the president's policy priorities. Months of wrangling with the Republican opposition on Capitol Hill will now follow.

"Even though we might have some differences at the outset, we're very eager to work with Republicans to cut spending, reduce our deficit," a senior Obama administration official told reporters.

The Budget proposes a five-year freeze on non-discretionary spending to save $400bn over ten years and $33bn in the 2012 fiscal year alone.

It will generate $100bn in education savings on grants, loans and subsidies, and proposes creating 20 new economic growth zones to receive expanded tax incentives for investment and jobs.