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WASHINGTON - PRESIDENT Barack Obama Monday vowed to halve by 2013 the huge budget deficit bequeathed by the Bush White House, warning inaction would leave Americans wallowing in debt and thwarted dreams.
Obama pivoted from imploring lawmakers to dish out billions of dollars in stimulus funds to warning of the consequences of buckled US government balance sheets, opening yet another high-stakes week for his young presidency. He warned that trying to revive the crisis-wracked US economy with his US$787 billion (S$1.2 trillion) economic kick-start plan would be futile without a determined drive to also bring deficits already topping a trillion dollars under control. The president cautioned that years of deficits would undermine confidence in the US economy, cause interest payments on US debt to go up and saddle future generations of Americans with huge debts. Public attempts to curtail runaway budget deficits come with Obama facing a barrage from critics who say the stimulus plan signed into law last week is packed with bloated, budget-busting spending. The federal budget deficit is already projected to grow to US$1.2 trillion this year, without the stimulus spending, and there are fears a new and era of mushrooming government debt could undermine any economic recovery. In a concerted political offensive, Obama earlier called on governors from most of the 50 US states to work with him to prevent waste in disbursing the billions of dollars in stimulus funds, at a meeting at the White House. Then, looking towards Louisiana Governor Bobby Jindal, a critic of the stimulus plan and a possible future Republican presidential candidate, Obama added: 'What I don't want us to do, though, is to just get caught up in the same old stuff that inhibits us from acting effectively and in concert. Obama also announced the appointment of veteran government cost-cutter Earl Devaney to scythe through any wasteful spending of stimulus funds and warned he would call governors to account for funds that were frittered away. He unveiled the release of US$15 billion in stimulus funds to help safeguard medical payments for low income patients, in an attempt to alleviate the financial burden on states hammered by the economic crisis. And he put Vice President Joe Biden in charge of implementing the stimulus law. Obama aides said at the weekend that the president planned to use raised taxes on the rich and cut war spending in a bid to halve the deficit by 2013. According to The New York Times, the president is proposing to tax investment income of hedge fund and private equity partners at ordinary income tax rates instead of the capital gains rate, which does not exceed 15 per cent. -- AFP
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