Obama unveils US Budget

President Barack Obama’s new budget was unveiled today as a $3.73trn spending blueprint that pledges $1.1trn in deficit savings over the next decade through spending cuts and tax increases.

It projects that the deficit for the current year will surge to an all-time high of $1.65trn.

That reflects a sizeable tax-cut agreement reached with Republicans in December.

For 2012, the administration sees the imbalance declining to $1.1trn, giving the country a record four straight years of $1trn-plus deficits.

Senior administration officials said Mr Obama would achieve two-thirds of his projected savings through spending cuts that include a five-year freeze on many domestic programmes.

The other one-third of the savings would come from tax increases, including limits on tax deductions for high-income taxpayers.

Even before the budget was revealed Republicans were complaining that it did not go far enough.

They branded Mr Obama's solutions as far too timid for a country facing unprecedented debts.

“We’re broke,” House Speaker John Boehner said yesterday on NBC’s “Meet the Press.” He was defending a Republican effort not only to squeeze more savings out of Mr Obama’s 2012 budget but also to seek $61bn in cuts for the current budget year.

House Republicans, many of whom were elected on an anti-deficit pledge, forced their own leaders to nearly double the savings they will seek in the seven months left in the 2011 budget year.

Congress has been unable to pass a budget for the current year, and the government has been operating on a stopgap spending bill that expires on March 11.

Jacob Lew, the president’s budget director, appearing on CNN’s “State of the Union,” refused to say what size cuts for 2011 would be acceptable to the administration. He stressed a desire to find a compromise that would avoid a government shutdown, something that last occurred during a protracted budget battle between Congress and the Clinton administration.

In addition to cutting deficits, Mr Obama’s new budget would increase spending in selected areas such as education, infrastructure spending and research and development – areas where the administration believes spending must be boosted for the country to remain competitive in the global economy.

Republicans have called these proposals non-starters, saying the government cannot afford spending increases and should only be debating how much to cut.

They have also challenged Mr Obama’s five-year freeze on many domestic programmes, saying that the president wants to freeze spending at 2010 levels, after two years of sizeable spending gains. They are pushing to take spending back to 2008 levels, before spending ballooned in response to a deep recession.