Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Presidential Election Forecast Matrix, Stock Market Uncertainty - 29th Oct 20
Stock Market Turning? Look For These Support Levels - 29th Oct 20
Silver: A Conceivable Dead-Cat-Bounce on the Cards - 29th Oct 20
Stocks are Strong but be Aware of this Continuing Pattern - 29th Oct 20
The Most Profitable Way To Play The Gold Boom - 29th Oct 20
Why You Should Hire An Accountant To Complete Your Tax Return - 29th Oct 20
Global Banking: Some Sectors Look as "Precarious as Ever" - 28th Oct 20
Silver Price Minor Dip Possible Before 2nd Major Upleg Starts - 28th Oct 20
�� How to Carve a Simple and Scary Pumpkin Face for Covid Halloween 2020 �� - 28th Oct 20
Gold Price One Last Dip Likely Then Major Upleg to New Highs - 28th Oct 20
Smart Money Is Going All-In On This New Gold Frontier - 28th Oct 20
Gold Stocks Still Correcting - 27th Oct 20
Gold and Crypto: Is This How Charts Look Before A Monetary Collapse? - 27th Oct 20
Silver's Coming Double Trigger Shotgun Price Explosion - 27th Oct 20
The $126 Billion Gold Opportunity in Australia - 27th Oct 20
Tips to Breeze through Your Spanish Classes Online - 27th Oct 20
Try The “Compounding Capital Gains” Strategy Today - 26th Oct 20
UK Coronavirus Broken Test and Trace System, 5 Days for Covid-19 Results! - 26th Oct 20
How the Coronavirus is Exacerbating Global Inequality, Hunger - 26th Oct 20
The Top Gold Stock for 2021 - 26th Oct 20
Corporate Earnings Season: Here's What Stock Investors Need to Know - 25th Oct 20
�� Halloween 2020 TESCO Supermarkes Shoppers Covid Panic Buying! �� - 25th Oct 20
Three Unstoppable Forces Set to Drive Silver Prices - 25th Oct 20
Car Insurance And Insurance Claims and Options - 25th Oct 20
Best Pressure Washer Review - Karcher K7 Full Control Unboxing - 25th Oct 20
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Obama to Propose More than $1 Trillion in U.S. Budget Deficit Reduction

Politics / US Debt Feb 14, 2011 - 09:23 AM GMT

By: Global_Research


Best Financial Markets Analysis ArticlePatrick Martin writes: The Obama administration will release a federal budget today for the fiscal year beginning October 1 that cuts the total federal deficit by as much as $1.1 trillion over the next decade, two thirds of it through cuts in domestic spending, according to press reports over the weekend.

Among the social programs to be gutted are Pell Grants for working-class college students and the LIHEAP program, which provides heating assistance for low-income families and the elderly. (See “Obama to slash home heating assistance for low-income families and seniors”.)

According to the Associated Press, “An administration official says President Barack Obama is proposing to cut $100 billion over a decade from the Pell Grant program through belt-tightening, but use the savings to keep the maximum college financial aid award at $5,550.”

No details were provided, but apparently the plan is to reduce the number of recipients of Pell Grants in order to avoiding reducing the dollar amount of the individual awards. The result will be tens of thousands fewer students from low-income families receiving a college education.

The New York Times reported, “Two-thirds of the reductions that Mr. Obama will claim are from cuts in domestic spending programs, including many he has supported in the past.”

The total deficit reduction is more than double the $400 billion Obama proposed last month to save by freezing domestic discretionary spending at the 2010 level for the next five years. About $300 billion is to come from tax increases, leaving another $400 billion to come from reductions in spending below the 2010 level.

The Times also reported that the Obama budget will call for ending the Bush tax cuts for families with incomes over $250,000 a year, which were extended for two years in a deal with the congressional Republicans in December.

Despite Obama’s claim at the time that he would oppose any further extension of the tax cuts for the wealthy, the administration budget does not include any increased revenue from closing that huge tax loophole—effectively conceding that hundreds of billions in additional tax handouts to the wealthy will continue. In other words, Obama’s promise of a “fight” over tax cuts for the rich in 2012 is so much hot air.

While Obama declared in his Saturday radio and Internet speech, “This budget asks Washington to live within its means, while at the same time investing in our future,” it is the poorest sections of the working class who will be compelled to sacrifice.

The Obama budget freezes pay for federal government workers, imposes the five-year spending freeze for domestic programs, and slashes community action programs, the Community Development Block Grant, and heating assistance.

The gargantuan Pentagon budget would face only a minor trim—$78 billion over ten years, or barely one percent of the cumulative trillions in military spending envisioned over that period. Even this cutback is based on the shaky assumptions that a complete US military withdrawal from Iraq will take place by December 31, 2011, and that US troop strength in Afghanistan will decline from present levels.

The Obama budget will propose $62 billion cuts in federal health spending over ten years to offset the cost of increasing Medicare reimbursement payments to doctors by the same amount. The only significant tax increase, a limit on the value of itemized deductions for wealthy households, is intended to offset the cost of adjusting the Alternative Minimum Tax to prevent it from hitting taxpayers in the $150,000 to $250,000 bracket—a benefit for the more well-off sections of the middle class, not hard-pressed working-class families.

While the Obama administration presses ahead with an austerity budget for FY 2012, the federal government is operating in the fifth month of FY 2011 without a budget. The Democratic-controlled Congress did not pass a single spending bill last year, ending the year by passing a continuing resolution funding federal departments through March 4.

This means that the incoming Republican-controlled House can take immediate action to slash current levels of spending, using the March 4 deadline as leverage. House Republicans wrangled all last week on various proposals to cut current spending by as much as $100 billion, with fissures opened up between the party leadership and the 87 newly elected members, many of them radical right-wingers aligned with the Tea Party groups.

An initial proposal by House Budget Committee chairman Paul Ryan of Wisconsin to slash $32 million from current spending was opposed in the House Republican caucus as too small. That plan called for an $8 billion increase for the Pentagon and homeland security and a $40 billion cut from domestic spending, and would have compelled some agencies to cut 20 percent or more.

House Republicans eventually agreed on a plan for $74 billion in cuts, which Ryan will formally introduce this coming week. It calls for a 9 percent reduction in non-military discretionary spending, including eliminating all federal funding for family planning services, the AmeriCorps national service program, high-speed rail services, the Legal Services Corporation, which provides legal assistance for the poor, and the Corporation for Public Broadcasting.

The budget for the Environmental Protection Agency would be slashed by a staggering 30 percent. Other cuts include:

· The Women, Infants and Children program, providing milk and other food for low-income pregnant women, mothers and young children, cut $758 million, about 10 percent

· Head Start preschool education, cut $1.1 billion, about 14 percent

· Community health centers, cut $1 billion

· The District of Columbia budget, cut $240 million, mainly from the Metro system.

There are moves in both the House and Senate to pass the 2011 Defense Appropriations Bill intact, which would effectively exempt the military budget from any cuts in the revised continuing resolution.

One month later, Congress must act to raise the ceiling on the national debt—another action that could have been taken by the previous Democratic Congress. House Republicans aim to use the debt ceiling vote as another means of compelling drastic cuts in spending.

A bipartisan group of at least 31 US senators is discussing plans for long-term austerity measures, including cuts in key entitlement programs like Social Security, Medicare and Medicaid. The organizers of this group, Democrat Mark Warner of Virginia and Republican Saxby Chambliss of Georgia, have been meeting with four senators who served on the Obama deficit commission that filed a report in December calling for major cuts in entitlements, in order to reach a consensus approach to making the sick and the elderly pay for a deficit which is caused by two wars, the bailout of Wall Street, and huge tax cuts for the wealthy.

Similar discussions are under way between the Obama White House and House Republican leaders. On February 9, Obama, Vice President Joseph Biden and chief of staff William Daley held a closed-door meeting with the three top Republicans, Speaker John Boehner, Majority Leader Eric Cantor and Majority Whip Kevin McCarthy, to discuss budget and regulatory issues, among others, without aides present.

The talks were conducted in the wake of a report by the Congressional Budget Office estimating that the federal deficit for the current fiscal year will grow to $1.48 trillion, up from $1.3 trillion in fiscal year 2010. For the following year, the CBO projects a deficit of $1.1 trillion. All these figures are indicators of financial bankruptcy, with the government deficit approaching 10 percent of US GDP in the current year, a level comparable to Greece.

Contrary to the mythology of the corporate-controlled media and both big business parties, the deficit is not the result of runaway spending on domestic social programs or entitlements. Federal tax receipts have plunged to only 14.8 percent of GDP, the lowest level in 60 years, in part because of the tax cuts for the rich, in part because of the economic slump.

World Socialist Web Site

Global Research Articles by Patrick Martin

© Copyright Patrick Martin, Global Research, 2011

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Mark Orr
15 Feb 11, 10:38
How can you blame Obama?

The poor and middle class were stupid enough to vote against him, so how can he not act accordingly. The poor are poor in many cases because they are stupid. Some are unlucky. But the fact is, enough voted for the GOP knowing full well they wanted tax cuts extended for the rich. So there you have it. The poor voted in favour of deepening their own poverty. Isn't democracy great?

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules