Obama’s plans to reduce US deficit


The US President Barack Obama plans to reduce the US deficit by four trillion dollars (£2.45 trillion) over a 12-year period. He will do this with a combination of cutting healthcare and defence costs whilst hiking up taxes. There is little mention of taxing the financial sector which has drained the national economy of resources.

The package of proposals will ignite a party political battle over deficit reduction policies which are sure to dominate the 2012 presidential and congressional campaign. It remains to be seen if any party will take on the real culprits in the financial sector or whether the global merchant banks and their influence over both parties will maintain a tight control over the economic policy agenda.

Under Obama’s plan, three quarters of the deficit reduction would come from spending cuts, including lower interest payments as the debt eases. One quarter of this, or one trillion dollars (£614 billion), would come from additional tax revenue.{jcomments on}