Obama to freeze US spend

US ECONOMY

US PRESIDENT Barak Obama yesterday endorsed a five-year freeze on discretionary government spending to help bridge the yawning US budget deficit.

The call, made as part of his State of the Union address, excluded spending on security, medical aid or social

security – but included all other domestic spending.

The US is approaching its current $14.3 trillion (£9 trillion) borrowing limit and while lawmakers can vote to extend it, pressure is growing on Obama to offer a plan to cut spending significantly.

Senate Republican leader Mitch McConnell rejected Obama’s cuts as simply freezing in place the extraordinary increase in spending since 2008.

The party has proposed that public spending should be reduced to 2008 levels and is keen to cut up to $100bn from non-security spending.

The US deficit is expected to reach $1.4 trillion this year, up from $1.3 trillion in 2010, from an overall 2011 budget

of $3.8 trillion. Obama struck a deal with Republicans at the end of 2010 to pass a finance bill extending an $858bn programme of tax cuts dating from George W Bush’s tenure as president.

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