Biggest redistribution of wealth in U.S.
Hard choices ahead
Concern over deficit
Washington: U.S. President Barack Obama embarked on the biggest redistribution of wealth from the rich to the poor in U.S. history on Thursday when he unveiled his first budget, which will amount to a staggering $3.5 trillion.
Raising fears among the American right that he could turn out to be one of the most liberal Presidents, Mr. Obama proposed $1trillion in tax rises over the next decade. But his budget, sent to Congress on Thursday, will face enormous resistance from Republicans, who expressed anger at the scale of the spending and tax increases.
The budget amounts to a huge gamble by Mr. Obama which critics argue could hobble the U.S. economy for years if it goes wrong; and cede ground to competitors.
Mr. Obama said that, in spite of recession, it was time to address the fundamental problems facing America.
This meant, he said, “some hard choices” lay ahead. To try to pay for his ambitious spending plans, he intends to rip into Pentagon spending. Also to be targeted are farm subsidies that have existed for decades and tax breaks for corporations. But the most contentious issue is his planned increase in taxes for anyone earning more than $2,50,000 a year from 2011.
One of the more staggering figures to emerge from the budget is the deficit for this year, which is due to rise from an already huge $1.2 trillion inherited from President George Bush to $1.75 trillion, much higher than had been expected. That is more than 12 per cent of GDP — the highest since the Second World War.
In spite of this, the Obama administration insisted it could begin to reduce the deficit next year, based on assumptions that the economy will start to recover by then.
The President will face repeated delaying action by Republicans. Though the Democrats enjoy an overwhelming majority in the House, they are dependent on winning over a handful of Republicans in the Senate. — © Guardian Newspapers Limited, 2009