President Obama has announced his plans to eliminate the US budget deficit within 12 years. His timetable is three times slower than George Osborne's.
President Obama has finally announced his plans to bring the US budget back to balance. He has chosen to do so on a timetable three times slower than Britain’s Chancellor, George Osborne.
“I’m proposing a more balanced approach to achieve $4 trillion in deficit reduction over 12 years. It’s an approach that borrows from the recommendations of the bipartisan Fiscal Commission that I appointed last year, and it builds on the roughly $1 trillion in deficit reduction I already proposed in my 2012 budget. It’s an approach that puts every kind of spending on the table — but one that protects the middle class, our promise to seniors, and our investments in the future.”
The independent Congressional Budget Office outlines that the US deficit was 8.9 per cent in 2010 and will be 9.5 per cent in 2011 – a similar level to the UK’s (Table 1.3). US debt is projected to be 68.9 per cent of GDP in 2011 compared to 66.1 per cent in the UK. Yet despite these similarities, President Obama is to take twelve years rather than the four that Osborne is taking to eliminate the cyclically adjusted current budget deficit by 2014-15. Indeed Obama’s approach will mean that the deficit is still “about 2.5% of GDP in 2015, and put deficits on a declining path toward close to 2.0% of GDP toward the end of the decade.“
Obama’s plan also contains something that looks much more like a ‘Plan for Growth’ than the Coalition’s short-cut of 1980s style cuts to tax and regulation. He said:
“We will make the tough cuts necessary to achieve these savings, including in programs that I care deeply about, but I will not sacrifice the core investments that we need to grow and create jobs. We will invest in medical research. We will invest in clean energy technology. We will invest in new roads and airports and broadband access. We will invest in education. We will invest in job training. We will do what we need to do to compete, and we will win the future.”
And unlike the Tory plans to cut the 50p rate and fail to renew the bankers’ bonus tax, Obama said, “we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can’t afford it. And I refuse to renew them again.”Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by becoming a Left Foot Forward Supporter today.