WASHINGTON (Reuters) – President Barack Obama wants to slash America’s ballooning deficit in half by 2013 by cutting spending on the Iraq war, eliminating wasteful public programmes and raising taxes on the wealthy, an administration official said yesterday.
“The deficit this administration inherited was $1.3 trillion or 9.2 per cent of GDP. By 2013, the end of the president’s first term, the budget cuts the deficit to $533 billion or 3.0 per cent of GDP,” the official said on condition of anonymity.
“Most of the savings will come from winding down the war in Iraq, increased (tax) revenue from those making more than $250,000 a year, and savings from making government work more efficiently and eliminating programmes that do not work,” the official said.
Obama’s administration is due to deliver the outline of its first budget on Thursday, for the 2010 fiscal year. It will reflect big increases in spending on public works that were part of the $787 billion economic recovery plan that Obama signed this week.
“Over time, the budget deficit will make it harder for our economy to grow and create jobs. That’s why the president’s budget for FY (fiscal year) 2010 puts us on the path to cut the deficit he inherited on January 20, 2009, in half by the end of his first term,” the administration official told Reuters.
Earlier yesterday, Obama said he had ordered the US Treasury to implement tax cuts for 95 per cent of Americans, fulfilling a campaign pledge he hopes will help jolt the economy out of recession.
The tax cuts are part of the economic recovery plan passed by the Democratic-controlled Congress over Republican opposition. The aim is to put more money in the pockets of Americans and stimulate the economy by increasing consumer spending.
“I’m pleased to announce that this morning the Treasury Department began directing employers to reduce the amount of taxes withheld from paychecks, meaning that by April 1st, a typical family will begin taking home at least $65 more every month,” Obama said in his weekly radio address.
“Never before in our history has a tax cut taken effect faster or gone to so many hard-working Americans,” he said.
With tens of thousands of Americans losing their jobs in the midst of a global economic meltdown, Obama has said fixing the US economy is his top priority. He has acknowledged that his success or failure in that will define his presidency.