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Obama announces budget to transform America

Article published on the 2009-02-27 Latest update 2009-02-27 15:40 TU

Barack Obama presents his first budget. Thimothy Geithner, Secretary of the Treasury looks on.(Photo : Reuters)

Barack Obama presents his first budget. Thimothy Geithner, Secretary of the Treasury looks on.
(Photo : Reuters)

US President Barack Obama unveiled an ambitious ten-year budget plan Thursday, radically shifting government spending priorities and aggressively spending in an effort to pull the economy out of recession. The budget would put the US public deficit at its highest level since World War II.

The 3.55 trillion dollar (2.8 trillion euro) budget would overhaul healthcare, seek to curb global warming, expand public education, save money via the Iraq withdrawal and raise taxes on corporations and the rich. Further details of the spending, which envision a 1.75 trillion dollar (1.38 trillion euro) deficit in 2009, would be released in April.

Taking aim at the Bush administration, Obama said that his budget is a break “from a troubled past” and blamed the current economic crisis on “an era of profound irresponsibility that engulfed both private and public institutions from some of our largest companies’ executive suites to the seats of power in Washington, DC”.

Despite the fact that he called the outlook, which would immediately cut back the deficit to 1.2 trillion dollars (947 billion euros) in 2010, “honest”, Republicans were quick to assert that the plan was based on an overly-optimistic economic forecast.

Obama shouldn’t have much trouble passing the budget through the House, where Democrats have a large majority, but he could face trouble in the Senate where Republicans have just enough votes to block legislation.

The budget introduces a carbon-credit system which would require companies that emit greenhouse gases to buy pollution credits. The funds would then be invested to develop alternative energy sources.

On the tax front, Obama said that he would raise taxes on anyone earning more than 250,000 dollars (198,000 euros) per year, limit deductions wealthy people can make and raise taxes on hedge funds.

The President also announced a health reform reserve fund used to finance disease prevention, wellness programmes and cost-effective treatments to save money on ballooning health-care costs.

And in dealing with education, Obama cancelled five billion dollars (3.9 billion euros) of government transfers to banks for student loans and reinvest in government grants for needy students, raising the maximum level of loans that they can receive.

The ambitious policy shift that this budget represents takes on many powerful interests in America, but Obama said he was determined to capitalise on this “once in a generation” opportunity for change.