US PRESIDENT Barack Obama is poised to announce $1.1 trillion (€800 million) in budget cuts today in a 10-year deficit reduction plan to avert a budget crisis and silence conservative opposition.
Mr Obama is expected to introduce a five-year freeze on discretionary spending and a pay freeze for government workers.
Severe cuts are expected to programmes that have previously had the president’s support. Fuel assistance for low-income families would be halved and an initiative to restore the environmental health of the Great Lakes would be reduced by a quarter.
The community development block grant, which goes to state governments to develop low-income areas, and funding for the Forest Service are also likely to be cut.
However, the cuts will have only a marginal impact on the national debt, which stands at $14.1 trillion. The 10-year deficit reduction would be less than the total projected deficit for 2011 alone, which the non-partisan congressional budget office estimates will be $1.48 trillion. The budget will not contain proposals to tackle areas of major spending in the US budget, such as social security.
The cuts will begin in October and extend over the next decade. Most savings will come from spending cuts. Even the Pentagon, often considered untouchable, will face cuts.
The military will not be subject to the same spending freeze as other government bodies but Mr Obama is expected to follow defence secretary Robert Gates’s proposal to slash spending at the Pentagon by $78 billion over the next five years. As well as savings from troop withdrawals from Iraq, weapons programmes are also on the chopping block.
The cuts are unlikely to appease Republicans, who are already calling for $100 billion in budget cuts for this year alone. Law enforcement, environmental protection, renewable energy, transportation and housing grants would all be cut severely under their proposals.
November’s election gains by Republicans backed by the conservative Tea Party movement have increased pressure on both Democrats and Republicans for aggressive cost-cutting.
The Republicans’ proposed cuts for 2011 were rejected by recently elected conservatives as too small, forcing the house speaker, John Boehner, to propose even deeper cuts. The 2011 budget has yet to be passed by Congress and today’s budget is expected to further intensify the debate.
Speaking on NBC’s Meet the Press, Mr Boehner said Mr Obama’s budget would “continue to destroy” jobs. “The president wants to talk about winning the future. This isn’t winning the future – it’s spending the future.
“We’re broke. What’s really dangerous is if we continue to do nothing and allow the status quo to stay in place.”
The Republicans are also set to clash with Mr Obama over proposals to reform Bush-era tax cuts.
The treasury has estimated that making the tax cuts permanent for everyone would cost it $3.7 trillion in lost revenues over 10 years. Mr Obama is planning to extend the cuts, but not for people whose taxable income is more than $250,000 a year.
In December, the White House's deficit-reduction commission said the US needed to make $4 trillion in cuts. – ( Guardianservice)