UPDATE3: Obama projects $1.33 trillion budget deficit in FY 2012, 2nd largest.
(EDS: UPDATING AND DELETING UNNECESSARY WORD IN 6TH GRAF)
U.S. President Barack Obama on Monday released his budget blueprint estimating a deficit of $1.33 trillion for fiscal 2012 through Sept. 30 this year, the second largest in history and topping the $1 trillion mark for the fourth year in a row.
The budget deficit will represent 8.5 percent of U.S. gross domestic product. It reflects the Obama administration's focus on stimulating the economy in the face of growing uncertainty over its outlook amid the European debt crisis.
Although the deficit is projected to fall to $901 billion in fiscal 2013, accounting for 5.5 percent of GDP, it will miss Obama's target of halving the deficit as a ratio of GDP from its level of 10.0 percent in fiscal 2009.
The goal was set in line with pledges most Group of 20 advanced economies made at their summit in June 2010 to halve their deficits from fiscal 2009 levels.
In his budget proposal in February last year, Obama had projected the deficit would slip to 4.6 percent of GDP in fiscal 2013.
Under the latest blueprint, the Obama administration seeks a record $3,803 billion in outlays for fiscal 2013, which covers the year from Oct. 1, compared with $3,796 billion in fiscal 2012.
Requested mandatory outlays, including social security and Medicare and Medicaid programs, came to $2.30 trillion, up from $2.25 trillion the previous year.
Revenues are estimated to total $2.90 trillion, up from $2.47 trillion in fiscal 2012.
The administration plans to scale back the budget deficit-GDP ratio further in coming years, with the aim of squeezing it to $575 billion, or 2.7 percent of GDP, in fiscal 2018.
However, it remains uncertain whether the U.S. government will be able to slash the fiscal deficit smoothly in coming years partly because the blueprint forecasts expenditures will swell constantly over the next decade, with the figure surpassing the $5 trillion level in fiscal 2019.
Of the outlays for fiscal 2013, Obama is proposing $525.4 billion for defense spending, excluding military expenses for overseas operations, down from $530.5 billion in fiscal 2012.
For overseas contingency operations, the administration requested $88.5 billion, down sharply from $115.1 billion in the previous year, mirroring the end of the war in Iraq.
Obama also said he aims to achieve $4 trillion in budget deficit reductions over the next decade.
''This will put the country on a course to a level of deficits below 3 percent of GDP by the end of the decade,'' Obama said in the budget blueprint.
He said the proposed fiscal 2013 budget implements tight caps on discretionary spending and that this measure alone will generate about $1 trillion in deficit reductions over the next decade.
Speaking in Annandale, Virginia, Obama urged Congress to cooperate for passage of the budget. ''If Congress adopts this budget, then along with the cuts that we've already made, we'll be able to reduce our deficit by $4 trillion by the year 2022,'' he said.
While stressing efforts to provide financial resources to boost job creation, strengthen American innovation and manufacturing and improve education, Obama reiterated his opposition to extending tax cuts for wealthy families making more than $250,000 a year which were introduced under the previous administration of President George W. Bush.
The budget plan is based on the administration's projection that the U.S. economy will grew 2.7 percent on an inflation-adjusted GDP basis in calendar 2012 and 3.0 percent in the following year.
The unemployment rate, which could become a factor affecting Obama's bid to win a second term in the Nov. 6 presidential election, is forecast to stand at 8.9 percent this year and 8.6 percent in 2013.
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|Publication:||Japan Weekly Monitor|
|Date:||Feb 21, 2012|
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