Wednesday 9 March 2011

Obama's 2012 budget



Obama has finally unveiled the mega budget of $3.73 trillion dollar which is aimed to reduce the fiscal deficit by $1.1 trillion over a decade by increasing tax and cost cutting.The Obama administration is seeming the imbalance to decline to $1.1 trillion for 2012 making it the 4th year in a row to witness a deficit of over $1 trillion.However,the experts said that real progress on the deficit cannot be made without tackling the government's big three entitlement programs — Medicare, Medicaid and Social Security — and defense spending. 

Some of the features of budget are discussed below by which Obama is planning to reduce deficit.



1)In energy sector Obama is aiming to double the share of cleaner sources of energy in nation's electricity by 2035 and of putting 1million electric vehicle on road by 2015.So Obama has allotted $8billion dollar for clean energy.To boost this he has slashed subsidies on non renewable resources like gas,coal and oil.


2)A cost saving of $33 billion is said to be achieved by terminating many government programs like Community development block grants,restoration of Great lakes,slashing of budget to help families which cant afford their heating bills.Around 200 programs are falling under this category.


3)Reducing the waiver or trimming of brackets for charitable contributions, mortgage interest and state and local tax payments  so wealthy Americans are going to pay more tax. The administration proposed this tax hike last year but it was a nonstarter in Congress. The reasoning behind this is given that it is done to safeguard middle class families from  Alternative Minimum Tax.


4)A $1billion cut has been proposed in grant for development of large airports,similar range cut has been proposed for other infrastructure programs and programs run by state institutions like Center for Disease Control and US forest service programs.


5)The higher education sector has also not been left off and around $100 billion would be slashed from various grants allotted by government like Pell Grants.


6)Defense sector is witnessing a reduction in cost of about $78 billion like in terms of budget alloted to Pentagon where unnecessary weapons programs have been scrapped.


Though Obama is trying very hard to again jump start the economy but his budget has already started a hue and cry and with Republicans pointing at still high prevailing levels of unemployment and questioning about the failure of Stimulus Package to bring economy back on track after recession the problem of Obama have become double folded.The experts say that over the next decade its not possible for the imbalances to fall below $607 billion which is much more than last imbalance of $456.8 billion in 2008 when President George W Bush was in office so let's see if Obama can convince congress to pass this budget.

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