New York: President Barack Obama proposed a $3.8 trillion (Dh13.9 trillion) fiscal 2011 budget on Monday that calls for $100 billion in additional stimulus spending and projects this year's deficit will hit a record $1.6 trillion.
The plan would reduce the shortfall in part by imposing more than $800 billion in higher taxes and fees on those earning more than $250,000, banks that benefited from the bailout and the oil, gas and coal industries.
The spending blueprint being sent to Congress f reflects the administration's struggle to boost the economy and job growth both top concerns of voters while tightening the government's belt to reduce deficits in the years ahead.
"We're trying to accomplish a soft landing in terms of our fiscal trajectory," Peter Orszag, director of the White House Office of Management and Budget, said in a briefing.
The $1.6 trillion deficit forecast for the current year represents 10.6 per cent of the US gross domestic product, making it the biggest since the Second World War.
Deficit projections
The White House deficit projection exceeds other forecasts. The Congressional Budget Office has forecast this year's shortfall at $1.35 trillion. The median of 39 analysts survey by Bloomberg News is for $1.37 trillion this year and $1.10 trillion next year.
The result would be a deficit that declines next year to $1.27 trillion and to $828 billion in 2012, according to the budget. In subsequent years, through 2020, the annual deficit would still total between $700 billion and $1 trillion. By 2020, the publicly held debt would approximately double to $18.5 trillion, according to estimates.
The plan proposes spending $61 billion to extend for one year the administration's ‘Making Work Pay' tax credit which provided $400 to individuals and $800 to couples. It is set to expire this year.
The bulk of the higher taxes would come by allowing tax cuts passed under former President George W. Bush to lapse at the end of this year. That would raise $678 billion, according to the administration.
