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A Budget shaped by political constraints

Business Times - 17 Feb 2011


A Budget shaped by political constraints

Obama hopes a compromise will lead to reforms of social programmes and the tax system

By LEON HADAR
WASHINGTON CORRESPONDENT

THERE is one good thing you could say about US President Barack Obama's federal budget proposals in the form of US$3.7 trillion blueprint for 2012 which were released on Monday. The White House's proposals - a revision in the plan for the current fiscal year coupled with a plan for the coming years - include proposals to cut the deficit by US$1.1 trillion through major spending cuts and large tax increases.

So as the White House envisions it, the federal deficit would grow under the budget plan from around US$14 trillion today to close to 'only' US$21 trillion in five years. But most experts believe that these numbers reflect over-optimistic forecasts that assume the acceleration of the current economic recovery to be followed by a new economic boom combined with relatively low inte…