The US 2011 fiscal year's expenditure will make up the country's all-time record of 3.8 trillion dollars. President Barack Obama has submitted the draft budget to Congress, saying in a comment that the budget's basic objective is to gradually start economizing and to fight unemployment.
According to White House officials, President Obama and his assistants had to make tough decisions when drafting the budget. And small wonder, since the budget deficit of the just-ended fiscal year has likewise proved record-high, namely 1.6 trillion dollars. The US Administration is therefore naturally focused on economizing and the creation of jobs, and Obama claims that the "additional" 200 billion dollars (compared with the 2010 budget) will be used precisely to attain these objectives.
The President's "tough decisions" have to do with 120 government programmes that will be frozen for at least three years for budget cuts sake. One such programme is NASA's Moon research. You may remember that it was Obama's predecessor George Bush, who set the objective of building a US base on the Moon. Now the programme has been cancelled, and what's more, the White House suggests that it should be private companies that should take care of flying astronauts and cargoes to the ISS.
Other government programmes that were to have got 447 billion dollars in funding will also have their budgets reduced. This kind of austerity approach is believed to help save over 250 billion dollars in the next 10 years. The money is suggested to be channelled into the promotion of the education system and scientific research. But Obama has chosen to keep out of reducing the funding of key social programmes, such as preferential health services and social insurance, given that the next US Midterm Elections to Congress are near at hand.
Yet another presidential initiative is expected to boost the Democrats' popularity rating, namely the so-called "responsibility payment". This is a new tax that will be levied on the 50 biggest financial companies. The tax will be paid until the companies in question have paid off all the money they received under the government's bailout plan. The tax is expected to raise an additional 90 billion dollars in the next decade.
The deputy Director of the Institute for the US and Canada Studies Victor Supyan says that the latest proposal of Obama's has elements of populism.
The proposal will, of course, trigger resistance from the banking community, Victor Supyan says, since it actually amounts to a major restriction of bonuses paid to the top managers. Obama's moves, if implemented, will certainly help economize quite an amount of money, but compared to the US current huge deficit, the saved amount will be no more than a drop in a bucket. There are certainly elements of populism in the decision. The US Administration and US society are inclined to accuse the financial institutions of the current crisis. These institutions are certainly to blame. But then, the government is likewise to blame for failing to come up with transparent and comprehensible rules of functioning for the national financial system.
It is both to the social and defence programmes that the Whtie House has granted "budget Immunity", as it were. On Monday the Pentagon requested Congress to allocate 708 billion dollars for the 2011 fiscal year. This is also a record-high figure, since the Pentagon never had been assigned such a huge bulk of money in budget allocations, not even in the Cold War years.
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