Obama addresses debt and deficit

President Barack Obama kept the heat up on the Republicans during his weekend video address.

Obama has still said that he does not want to sign a short term extension of the debt ceiling. In an earlier press conference, he said that he would reform Medicare by implementing a means test to determine how much people should pay for medical bills.

The president insists that wealthy American and corporations should pay their fair share of taxes.

Obama unveils $3.6 trillion budget, $1.75 trillion deficit

Republicans will certainly pounce on the latest news from the Obama administration revealing a proposed $3.6 trillion budget for 2010.

Obama's plan includes up to $750 billion in additional bailout money for banks, and a $1.75 trillion deficit. A "reserve fund" of $634 billion will be used to help pay for the president's universal health care plan.

To pay for the proposed budget increase, Obama plans a series of tax rate increases including one on the top bracket individuals making more than $200,000 a year. Families making more than $250,000 a year will also have their deductions reduced.

Capital gains tax rates for people in the top tax bracket would increase to 20 percent, up from 15 percent.

Some $353 billion over 10 years will be raised through "revenue changes and loophole closures" for business entities.

Obama also plans to raise $645 billion through a pollution tax using a cap-and-trade system that allows less-polluting companies to sell carbon credits to those who produce more pollution.

BBC News

Obama Budget Sees $1.75 Trillion Deficit

New York Times - ‎56 minutes ago‎

President Obama, with Vice President Joseph R. Biden Jr. and Treasury Secretary Timothy F. Geithner, spoke about the budget on Thursday at the Eisenhower Executive Office Building in Washington.

Obama Unveils $3.6 Trillion Budget, Sets Aside Billions for Health ... FOXNews

Obama submits budget blueprint CNN

Obama pledges to cut deficit in half by 2013

Despite the large sums needed for bailouts, President Barack Obama still plans to slash the budget deficit in half by 2013.

Obama plans to cut military spending by withdrawing troops from Iraq, and to raise money by increasing taxes on the wealthy.

During the campaign, Obama promised to roll back the tax cuts made by George W. Bush.

On Monday, Obama will convene a fiscal summit with experts to formulate a strategy to address the trillion dollar deficit.

However, the president will not cut back in all areas and still intends to make changes that he pledged during the campaign.

“The president believes there are essentially three areas that have to move forward even as we pare back elsewhere — health care, energy and education,” said senior Obama adviser David Axelrod. “These are the bulwark of a strong economy moving forward.”


During his weekly address, President Obama outlined what the stimulus package and his home foreclosure plan can do to help turn around the nation's economy. President Obama plans to address a joint session of Congress Tuesday night.


AFP
Obama Pledges to Seek Deficit Cuts
New York Times, United States - 10 hours ago
By SHERYL GAY STOLBERG WASHINGTON — President Obama pledged on Saturday to look for ways to “cut the trillion-dollar deficit we inherited,” and said he was ...
Obama to Unveil an Ambitious Budget Plan Washington Post
Obama wants to cut US deficit in half by 2013 Reuters
Obama urges control of 'exploding' deficits AFP

Obama's economic strategy

As four negative economic reports were released today, President-elect Barack Obama announced the formation of a new economic recovery board that will be headed by former Fed chair Paul Volcker.

Jobless claims remained high, while consumers cut back on spending by the largest amount since the 2001 terrorist attacks. The new government reports also indicate that orders to U.S. factories dived, and homes sales fell to the lowest level in nearly 18 years.

“As soon as the recovery is well under way, we need to set up a long-term plan to reduce the structural deficit and make sure we are not leaving a mountain of debt for the next generation,” Obama said during the press conference in Chicago.

The statement indicates that Obama is willing to continue high deficit spending throughout the recessionary period.

With the government scraping the barrel for cash, it may end up drying up credit markets further rather than freeing them up as intended. In effect, the government is borrowing money and then infusing into ailing institutions hoping they will resume lending out money. However, many of these banks are such bad shape they need to raise cash to keep their books in order.

And what may be enough to keep a specific institution afloat one day, may not be enough the next day depending on the stock market, the value of the bank's holdings, and other conditions. So some banks may very well be "black holes," while on the other hand the credit market is not an "inexhaustible vessel of plenty."

guardian.co.ukVolcker Tapped for Advisory Role
Wall Street Journal - 2 hours ago
By JONATHAN WEISMAN President-elect Barack Obama will appoint former Federal Reserve Chairman Paul Volcker on Wednesday to be the chairman of a new White ...
Obama Names Volcker to Head Panel on Reviving Economy (Update3) Bloomberg
Obama chooses Volcker as economic adviser MarketWatch
Obama picks Volcker to head economic group CNNMoney.com

Obama names Volcker to head new econ advisers @ Yahoo! Video