US deficit shoots up to 10% of GDP

The US President, Mr Barack Obama, on Monday projected the US budget deficit would peak at a fresh record in 2010 before easing as he pushes for fiscal responsibility while battling double-digit unemployment.

Dubbed an old-style liberal tax-and-spender by his Republican opponents, Mr Obama is under pressure to convince investors and big creditors like China that he has a credible plan to control the country’s deficit and debt over time.

“In the long term, we cannot have sustainable and durable economic growth without getting our fiscal house in order,” Mr Obama said in a statement with the budget’s formal release.

His budget for the fiscal year to September 30, 2011, a blueprint that is subject to change by the US Congress, forecast a deficit of $1.56 trillion in 2010, or 10.6 per cent of the economy measured by gross domestic product (GDP). The rise was partly due to the $787 billion stimulus package that Mr Obama pushed through Congress early last year to fight the recession.

Republicans seized on the grim fiscal forecast to criticise Mr Obama’s handling of the economy.

Senator Judd Gregg, the leading Republican on the Senate Budget Committee, warned that the country was sinking into a “quagmire” of debt and said Mr Obama’s stimulus plan had failed to create jobs.

“These circumstances call for a bold, game-changing budget that will turn things around, put in place a plan to restrain spending, reduce the debt and tackle the big entitlement programs that are growing out-of-control,” he said. “Instead, the President has sent us more of the same.”

Mr Obama plans to save money from 2011 by curbing 120 projects, including space mission to return to the moon, but will invest in education and research.

But analysts surveyed the numbers with a healthy dose of skepticism. “I don’t think there is anything out there that is job creating and I don’t have much confidence that some of the spending cuts will happen,” said a New York-based equity strategist.

Related posts:

1. Obama’’s ten best, and ten worst, moves of the year revealed (Part-I) Washington, Nov.5 : The Politico web site has spoken to a dozen political insiders...
2. India is likely to grow at 6.5% in FY10 Prime Minister Dr Manmohan Singh said the worst for the economy was behind us...
3. NTPC sale to fetch 1.8 billion dollars: Disinvestment Secretary New Delhi, Nov.14  : A five percent stake sale of the state-run power producer National...
4. India is likely to grow at 6.5% in FY10 India is likely to grow at 6.5% in FY10; India is likely to grow at...
5. India to grow by 6%: FM The Indian economy is on a recovery path and the GDP growth of the country...