Obama budget cuts drastically on spending

US PRESIDENT Barack Obama was yesterday expected to project a record deficit in a 2011 budget featuring billions of dollars for jobs but programme cuts and tax rises on the rich to tame huge fiscal shortfalls.

US PRESIDENT Barack Obama was yesterday expected to project a record deficit in a 2011 budget featuring billions of dollars for jobs but programme cuts and tax rises on the rich to tame huge fiscal shortfalls.

The about R30trillion budget the White House was to unveil includes a freeze on non-security discretionary spending, a R756billion jobs package and more money for education and homeland security.

It foresees a record, and higher than expected deficit of about R11,8trillion in 2010, falling to about R9,8trillion in 2011, and abandons a US bid to send humans back to the moon, by ending the Constellation space programme.

The Obama administration said the 2011 budget is aimed at dealing with the aftermath of the financial, fiscal, housing and unemployment crises.

"This budget embodies the president's efforts to deal with all those situations," said Obama's communications director Dan Pfeiffer, who said the budget contained "tough choices" in a bid to curb spending.

The budget would also set the battle lines for the political debate in the run-up to mid-term congressional elections in November, in which Obama's Democrats, paying the price for high unemployment, fear losses.

Republicans are trying to brand Obama as a big-spending liberal, but the administration says new growth figures last week showing a 5,7percent expansion in the economy in the past quarter prove his policies are working.

The administration says that the deficit will stand at R9,8trillion in 2011, which will represent 8,3percent of gross domestic product, compared to 10,6percent of GDP in 2010.

Republicans and some conservative Democrats have raised the alarm at high government spending, which has swelled the deficit, and the issue has been a source of considerable political pressure for Obama. - Sapa-AFP

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