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Barack Obama unveils US budget plans for 2012 Barack Obama unveils US budget plans for 2012
(40 minutes later)
US President Barack Obama has unveiled his 2012 budget, describing it as a "down payment" on future cuts to the US budget deficit. US President Barack Obama has unveiled his 2012 budget, describing the proposal as a "down payment" on future cuts to the US budget deficit.
The budget aims to cut $1.1tn (£690bn) from the US deficit over a decade.The budget aims to cut $1.1tn (£690bn) from the US deficit over a decade.
He said the US must live within its means and called for reductions in scores of programmes, but said "we can't sacrifice our future". He said the US must live within its means and called for some reductions, but said "we can't sacrifice our future" with drastic cuts.
Republicans, who control the House of Representatives, do not think the cuts go far enough in tackling the deficit.Republicans, who control the House of Representatives, do not think the cuts go far enough in tackling the deficit.
The speaker of the House of Representatives, Republican John Boehner, told US TV network NBC the proposed budget would "continue to destroy jobs by spending too much, borrowing too much and taxing too much".The speaker of the House of Representatives, Republican John Boehner, told US TV network NBC the proposed budget would "continue to destroy jobs by spending too much, borrowing too much and taxing too much".
Longer approach Although Mr Obama is empowered to propose a budget, it is up to the US Congress to enact it into law and then to distribute the funds.
Analysts have also wondered if cutting $1.1tn will be enough. Mr Obama's budget is seen as an opening bid in a long process of negotiation with House and Senate leaders of both parties, and analysts say Republicans will press for deeper cuts.
At a school in Baltimore on Monday morning, Mr Obama called for future investment in education, transportation infrastructure and high speed internet, "so that every American is equipped to compete with any worker anywhere in the world".
But he acknowledged that with the US government budget deficit expected to top $12tn through the next decade, some cuts and tax increases are needed.
"While it is absolutely essential to live within our means - and while we are absolutely committed to working with Democrats and Republicans to find further savings and to look at a whole range of budget issues - we can't sacrifice our future in the process," he said.
"We have a responsibility to invest in those areas that will have the biggest impact in our future."
The budget calls for a five-year overall cut in domestic non-defence spending, reducing that spending to the lowest level since the 1950s, Mr Obama said.
That would amount to about $400bn in reduced spending over the next decade. Republicans, meanwhile, have called for $100bn per year in spending cuts.
Among the programmes slated for cuts under his own plans are some that Mr Obama said he considered crucial, including development grants for poor neighbourhoods.
Mr Obama also reiterated his call for $78bn in cuts to the defence budget.
"If we're going to walk the walk when it comes to fiscal discipline, these kinds of cuts will be necessary," he said.
He said he aimed to wring greater efficiency from government programmes and to sell 14,000 government office buildings and properties.
Recovery fears
Analysts have questioned whether cutting $1.1tn will be enough.
"It's a lot less than the Republicans wanted to see," said Philip Poole, global head of macro investment at HSBC Global Asset Management in London."It's a lot less than the Republicans wanted to see," said Philip Poole, global head of macro investment at HSBC Global Asset Management in London.
"It's a start, it's a move in the right direction, but it's probably not enough in terms of what needs to be done ultimately, and it's not starting quickly enough.""It's a start, it's a move in the right direction, but it's probably not enough in terms of what needs to be done ultimately, and it's not starting quickly enough."
Whereas countries such as the UK have imposed spending cuts to reduce their deficits, the US has said rapid, drastic spending cuts are not the way forward. Whereas countries such as the UK have imposed spending cuts to reduce their deficits, the Obama administration has said rapid, drastic spending cuts are not the way forward.
US Treasury Secretary Timothy Geithner said two weeks ago that "you got to make sure that you don't hurt the recovery and take too much risk that you damage the early expansion by shifting too prematurely to substantial restraints". "You got to make sure that you don't hurt the recovery and take too much risk that you damage the early expansion by shifting too prematurely to substantial restraints," Treasury Secretary Timothy Geithner said last month.
Long processLong process
The US is one of only two G20 countries which expects its deficit to rise, not fall, this year. The US is one of only two G20 countries which expects its deficit to rise, not fall, this year.The deficit is predicted to increase to $1.645tn in the 2011 financial year, then drop to $1.1tn in 2012.
The deficit is to predicted to increase to $1.645tn in the 2011 financial year, then drop to $1.1tn in 2012.
If this was achieved it would cut the deficit as a share of the US economy to 3.2% by 2015 from 10.9% this year,If this was achieved it would cut the deficit as a share of the US economy to 3.2% by 2015 from 10.9% this year,
The 2012 budget is a proposal to Congress laying out the president's policy priorities.
Mr Lew, director of the Office of Management and Budget, said he believed the president's budget would help "the government live within its means, while still investing in America's future".
But the two parties disagree over the level of spending cuts needed to cut the deficit and boost economic recovery.
Bringing them together will be a long process that takes most of the year before the required congressional approval of the budget.
The proposed $1.1tn budget reductions are much greater than the $400bn of cuts in non-essential programmes the president unveiled in his State of the Union address last month.The proposed $1.1tn budget reductions are much greater than the $400bn of cuts in non-essential programmes the president unveiled in his State of the Union address last month.
Mr Obama was also expected to propose an $18bn plan to improve high-speed internet access, and a further $8bn for high-speed railways.Mr Obama was also expected to propose an $18bn plan to improve high-speed internet access, and a further $8bn for high-speed railways.