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White House: US Deficit To Rise, Then Fall

  • Kent Klein

President Barack Obama (File Photo)

President Barack Obama (File Photo)

President Barack Obama’s proposed government budget calls for a slightly higher U.S. deficit for the remainder of this year, then a smaller deficit next year. The president will unveil his budget plan on Monday.

An outline of the president’s budget, released Friday, shows the deficit increasing to $1.33 trillion for the remainder of 2012, a small increase from last year’s $1.3 trillion shortfall.

The spending plan forecasts a drop in the deficit in 2013, to $901 billion, which fails to meet Mr. Obama’s goal to cut the deficit in half in his first four years in office.

The president’s plan will include about $1 trillion in spending cuts, as part of an agreement with Congress, which Mr. Obama signed into law last August.

The president wants to cut another $3 trillion from annual deficits over the next 10 years, while spending more in the short term to speed the economic recovery.

The Pentagon is in line for an unusual amount of budget-cutting. Defense spending would be reduced by almost a half-trillion dollars from last year’s White House budget proposal.

The administration says savings from ending the wars in Iraq and Afghanistan will yield about $850 billion in savings in the coming decade. The president says that money will be used to pay for new roads and railways, and to reduce the deficit.

Mr. Obama’s budget calls for new spending on education, manufacturing, and research and development. Another $350 billion would go to strengthening economic growth.

The president’s plan may have a difficult time getting approval from Congress. Trimming the 2013 deficit will depend in part on ending tax cuts for wealthy Americans, which Republicans have strongly opposed.

A spokesman for House of Representatives Speaker John Boehner, in an email, blasted the proposal as an “unserious budget” and “a recipe for debt, doubt and decline.” He warned that it would impose massive tax increases on small businesses while piling up enormous debt.

House Republicans plan to offer their own budget plan next month. Theirs would reject tax increases and would include deeper cuts in government spending.

The president will announce his budget plan Monday, at a community college near Washington.