The focus of the 2012 budget will be on cutting down the deficit, according to budget director Jacob Lew. The statement was made by the director in a talk aired on CNN. If the budget achieves its targets, U.S.’s deficit will be reduced to the tune of $1.1 trillion over the next 10 years.
Lew also hinted at the strategy that will be followed by President Obama to achieve this ambitious target. He said that strategic spending that will make the U.S. more competitive in the global markets combined with expenditure cut backs in some hand picked areas will provide the solutions.
The statement does not give any specifics about how exactly the $1.1 trillion deficit will be wiped out from the books. Neither does it clarify how the to-be-announced budget will deal with or impact long term deficit.
However, one aspect that is quite clear is that the President is proposing to put a clamp on discretionary spending on non-security related issues. The clamp will last for five years if Obama’s call is indeed heeded. This alone will save $400 billion, a massive chunk of money by all standards. However, this expense head still accounts for only about 10% of the total spending by the Fed.
Critics have been quick to point out that rather than focusing on this relatively small expense area, the government would do better to address items like entitlement programs, where enormous expense is borne year after year.
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