Later this week, President Barack Obama will unveil his vision for U.S. government spending and taxation. The focus on the nation’s fiscal future comes amid renewed concerns about sluggish job creation that could foreshadow a weakening of America’s fragile economic recovery.
President Obama wants to shrink the deficit and promote economic growth.
“For years, an argument in Washington has raged between reducing our deficits at all costs, and making the investments we need to grow the economy. My budget puts that argument to rest. Because we do not have to choose between these goals - we can do both.”
Obama says his budget will curb spending and cut corporate tax breaks - while boosting funding for infrastructure and education.
Republicans have already rejected the proposal. House Speaker John Boehner says the president’s budget “never balances.” Former Republican Senator Sam Brownback, now governor of the state of Kansas, says the private sector holds the key to better economic and fiscal health.
“Our Republican message is a belief in the power of people rather than the control of government. This unleashes the creativity of entrepreneurs and the strength of hope and dreams.”
The budget battle comes one month after the start of automatic federal spending cuts, known as the sequester, that may have contributed to a weakening labor market. The U.S. economy created fewer than 100,000 jobs last month. White House economist Alan Krueger predicts a tough road ahead.
“We have heard from some companies that the sequester is affecting their hiring decisions. Obviously, government spending has been cut as a result of the sequester. So going forward that is going to be a weight on the economy.”
Republicans accuse the White House of overstating the sequester’s impact.
The U.S. deficit is projected at $900 billion this year, down slightly from previous years. In Congress, the Republican-controlled House and the Democrat-controlled Senate have passed competing budget bills, neither of which is likely to be adopted by the other chamber.
Absent bipartisan compromise, a so-called "grand bargain," the sequester will remain in effect and the deficit will stay at levels considered unsustainable by most economists.