By: Mike Campbell
The President of the United States revealed his government’s budget plans for 2011. Although the USA has formally left recession and is growing again, there is near universal agreement that the recovery is very weak and that there is still a significant risk of further job losses. US unemployment is at about the 10% mark. In his speech, the President unveiled a $3.8tn budget for 2011. On the positive side, the budget includes additional funding for education, scientific research and defence programmes (ever popular in some circles). Probably the most significant thing on the positive side of the ledger is that $100bn, in the shape of tax incentives, has been earmarked for plans to reduce unemployment levels. Companies will receive incentives to take on new workers and the costs of the package will, in part, be met by higher taxes on the wealthy who earn more than $250000 per annum – bank executives, say!
The budget also includes moves which are designed to start to address the huge US deficit. President Obama forecasts that the deficit will rise to $1.56tn this year (as recently as 2007, it was less than $0.2tn). The budget foresees a year cap on domestic spending programmes which should save $250bn, but will protect spending on welfare benefits, healthcare for the elderly, the defence programme and homeland security. He has cancelled plans to return man to the moon by 2020 which were put in place by his predecessor, George Bush. It is perhaps ironic that legacy of the iconic plans of President Kennedy to put a man on the moon by the end of the 1960s should be put to an end by the very man that many see as his natural heir; perhaps it is simply a case of “been there; done that!”