Updated: February 2, 2010 09:28 IST

Budget deficit: Obama blames it on Bush

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President Barack Obama makes a statement in the Grand Foyer of the White House in Washington on Monday on the budget he submitted to Congress. Photo: AP
President Barack Obama makes a statement in the Grand Foyer of the White House in Washington on Monday on the budget he submitted to Congress. Photo: AP

President Barack Obama sent Congress his new budget Monday, a plan that forecasts the government spending a record $1.66 trillion more than it takes in through taxes.

Mr Obama blamed the huge deficit on the decisions of President George W. Bush, previous Congresses and his administration's steps to prevent an economic collapse.

The president said in normal circumstances he would have worked to pay down the yearly deficit immediately, but costly steps were need to help an economy in free fall.

He asked lawmakers to follow his lead on reducing waste and to avoid ``grandstanding.''

The budget proposal reflects, as well, pressure on Mr Obama ahead of the November congressional elections to cut unprecedented growth in the U.S. debt.

Mr Obama and the Democrats are trying to regain their political footing after the surprising loss of a Massachusetts Senate seat long held by the late Sen. Edward M. Kennedy. That vote cost them their supermajority and appears to have indefinitely stalled efforts to pass health care reform legislation.

In the meantime, Mr Obama pledged in his State of the Union address last week to make job creation his top priority.

After a protracted battle on health care dominated his first year in office and led to a string of Democratic election defeats, the administration hopes its new budget will convince Americans the president is focussed on fixing the economy.

The $3.83 trillion budget includes a huge tranche to lower double-digit unemployment _ about $100 billion in tax incentives to hire workers and improve the nation's infrastructure and energy sector.

The spending jump will be partially offset by higher taxes on wealthy Americans _ families earning more than $250,000 yearly _ through plans to let expire tax cuts put in place during the administration of former President George W. Bush.

Mr Obama also seeks an overall freeze on the portion of government spending excluding commitments for federal pension and health care benefits for the elderly as well as defense and homeland security.

As written, the spending plan's $1.56 trillion in red ink surpasses last year's then-record $1.41 trillion gap. It reflects a continuing flood of government spending designed to ease the worst economic downturn since the 1930s Great Depression.

Republicans complained about Mr Obama's proposed tax increases and said the huge projected deficits showed he had failed to get government spending under control. But administration officials argued that Obama inherited a deficit already topping $1 trillion when he took office.

Given the severity of the downturn, they say, the president had to spend billions more to stabilize the financial system while trying to pull the economy out of recession.

Mr Obama's job proposals would push government spending in the current fiscal year ending at the close of September to $3.72 trillion, up 5.7 percent from last year. Obama's blueprint for the 2011 budget year, which begins Oct. 1, would increase spending further to $3.83 trillion, 3 percent higher than projected for this year.

Much of the spending surge over the past two years reflects the cost of the $787 billion economic stimulus measure that Congress passed in February 2009.

Deficit growth reflects not only the increased spending but also a big drop in tax revenues as a result of the 7.2 million people who have lost jobs since the recession began and weaker corporate tax receipts.

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