Sunday, January 31, 2010

U.S. deficit may hit recovery: Obama

U.S. President Barack Obama renewed his pledge on January 30 to make job creation his top priority in 2010 but said it was also critical to rein in a record budget deficit that threatened economic recovery. Obama used his weekly radio and Internet address to remind Americans of the various proposals he put forward in the last week to spur job growth and tame a $1.4 trillion deficit. The White House has said Obama is still committed to a promise he made last year to halve the deficit by the end of his term in 2013. But in his radio address on Saturday, he talked only of reining in the deficit. Obama is due on Monday to unveil his proposed budget for fiscal 2011 that begins October 1, and has said it will include a threeyear spending freeze on some domestic programs.

A Pew Research Center study published this week showed 60% of those polled viewed reducing the budget deficit as a top priority for 2010, up from 53 % in 2009. Obama acknowledged these concerns in his address. As we work to create jobs, it is critical that we rein in the budget deficits weve been accumulating for far too long deficits that wont just burden our children and grandchildren, but could damage our markets, drive up our interest rates, and jeopardise our recovery right now, he said. The size of the deficit is a political hot potato in an election year, with Republicans seeking to paint Obama as a big spender and the White House countering that the president inherited a $1.3 trillion deficit when he took office. Democrats face a tough time in holding on to their majorities in both the Senate and the House of Representatives in the mid-term congressional elections in November. High unemployment, now at 10%, and the size of the deficit could hurt them, analysts say.

Obama noted that new data released on Friday showing the economy grew at a 5.7% rate in the fourth quarter, calling it a sign of progress and evidence that his policies to stimulate the economy were working. But when so many people are still struggling when one in 10 Americans still cant find work, and millions more are working harder and longer for less our mission isnt just to grow the economy, he said.

Source: The Economic Times, January 31, 2010

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