The President is expected this Thursday to release a budget that will slash the deficit in half by raising taxes on wealthy Americans and reducing spending on the wars in Iraq and Afghanistan.
The nation's deficit this year is expected to reach $1.5 billion, the largest deficit as a percentage of the nation's economy since the end of World War II.
In his weekly radio address, the President promised that his budget would be "sober in its assessments, honest in its accounting, and that lays out in detail my strategy for investing in what we need, cutting what we don’t, and restoring fiscal discipline."
The budget outline is expected to nearly halve the deficit by the end of the President's term, an anonymous official told Reuters.
"The deficit this administration inherited was $1.3 trillion or 9.2 percent of GDP. By 2013, the end of the president's first term, the budget cuts the deficit to $533 billion or 3.0 percent of GDP."
Reducing spending on the war in Iraq could realize savings of around $90 billion, while additional revenue will be generated by allowing parts of the Bush tax cuts of 2001 and 2003 to expire. Wealthy Americans making over $250,000 could expect the highest tax rate to return to 39.6 percent, although the tax rate on capital gains and dividends would remain at 20 percent.
On Tuesday the President will make a speech before a join session of Congress explaining the necessity of running short-term deficits to confront the ongoing recession.
"Obviously in the immediate future with the economy the way it is and the banking system the way it is and the housing situation the way it is, it’s not a time to worry about balancing the budget – and I say that as a confirmed deficit hawk," Robert Bixby, Director of the Concord Coalition, told Politico.
The President's full budget will be released in April.
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