US President Barack Obama has proposed a budget that will push the deficit to a new record ($1.65 trillion). He calls it a budget of "hard choices and sacrifices" while the deficit is above $1.5 trillion recommended by Congressional Budget Office. People are accusing him of misusing his leadership such as Paul Ryan (Republican chair of the House Budget Committee). President Obama plans to cut $1.1 trillion over the next decade in fiscal fat. However, it pushes the national debt into the danger zone.
The IMF predicts that the debt of the US will increase from 62pc of GDP (2007) to 111pc (2015). The White House wants a 5-year freeze on discretionary spending (free for the user's purpose spending). The Republican government could shut down the government if President Obama does meet them half way, but this must be done carefully and as a last resort. President Obama is trying conserve money by cutting down on the oil and gas industry and going into other green energy sources (wind, solar). While other countries like Japan can depend on domestic savings to help, the US can't since its savings rate is just 5.3pc.
