US PRESIDENT Barack Obama yesterday pledged to halve the US deficit by 2013 and axe $1.1 trillion (£686m) of spending over the next decade in an effort to contain the budget deficit, but expects to run up a record $1.6 trillion deficit in 2011.
Republicans said the President had not gone far enough in curbing costs, setting the scene for a year-long fight with Congress before the budget can be passed.
But Obama said as he launched his budget that swingeing cuts for the Pentagon, subsidised housing and college students are a down-payment for the recovery of the US economy.
Obama’s $3.7 trillion budget proposal for 2012 shows the deficit rising to a record $1.6 trillion in 2011, then falling sharply to $1.1 trillion in 2012.
This proposal 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, in line with pledges made by G20 leaders to curb runaway deficits.
US debt will hit its legal limit of $14.3 trillion by the end of May unless politicians act to lift that ceiling.
Two-thirds of the savings will come from spending cuts, with the rest coming from tax hikes and higher revenue as economic growth starts to pick up.
US companies are set to lose some tax breaks for income earned abroad under the plans, with Obama seeking $129bn over 10 years by cutting big business benefits.
The budget also calls for extra funding for financial watchdogs including the Securities and Exchange Commission.
FAST FACTS | US BUDGET
US Presidents publish a budget proposal every February, which must be approved by the Senate and the House of Representatives.
Obama plans to run a record fiscal deficit of $1.6 trillion in 2011, before cutting back in 2012.