Obama seeks to fix America's fiscal hole

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Obama seeks to fix America's fiscal hole

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Barack Obama is set to announce his budget plans for next year and a new record US budget deficit for this year.

The president has already promised that the deficit will be cut to three percent of GDP- the figure economists say is sustainable- by 2015.

Having grown by 200 billion dollars to 1.6 trillion dollars this year, the deficit is currently almost 11 percent of GDP. Thus there is an urgent need to start making cuts.

Senior White House advisor David Axelrod hinted that some tough choices lie ahead, saying:

“There is a three year discretionary spending freeze. That is to say there is a three year cap on domestic discretionary spending. Within that cap we are going to have to prioritise, just like every business or family would.”

Obama’s critics say his big spending is the reason for America’s largest post-war deficit.

Obama says he inherited a “fiscal disaster” from his predecessor George W. Bush and has had to borrow money to avoid economic meltdown.

The US economy is showing signs that it is getting back on track, but these signals are yet to seep into the job market.

Obama has said his priority is tackling US unemployment, which currently stands at 10 percent, its highest for 26 years. He plans to spend 100 billion dollars immediately on a bill aimed at getting people back to work.