President Obama’s rallying cry for Americans to pull together quickly unravelled today as government economists revealed the biggest budget gap in U.S. history.
The weak economy and a new round of tax cuts will push up the U.S. deficit this year to almost $1.5 trillion, according to the Congressional Budget Office.
At 9.8% of the country’s entire gross domestic product, the staggering amount of debt is one of the largest as a share of the US economy since World War Two.
Gift: President Obama receives a Green Bay Packers jersey bearing Charles Woodson's name from Wisconsin governor Scott Walker (centre) and Green Bay mayor James Schmitt in Wisconsin today
Stormy times ahead: President Obama walks in the rain before he departs Joint Base Andrews outside Washington for a day trip to Wisconsin today
The eye-popping numbers mean the government will continue to borrow 40 cents for every dollar it spends.
And the timing of the announcement could not have been worse for the president.
In his State of the Union speech last night, Mr Obama appealed to the nation to unite in a new spirit of competition to beat off challenges from mushrooming economies like China and India.
In a rare break with partisanship, Democrats and Republicans even sat next to one another in the joint session of both houses of Congress to listen to the televised address.
But the camaraderie didn’t last long, with Republican leaders speaking out immediately after the speech to demand much more drastic cuts to close the gaping deficit.
And the backlash began in earnest today when the scale of this year’s expected budget gap was unveiled.
Republicans attacked Mr Obama for doing too little, too late.
'I urge Democrats and Republicans to work together': President Barack Obama addresses a Joint Session of Congress while delivering his State of the Union speech
‘There’s got to be some kind of absolute iron-clad path to getting spending down,’ said former presidential candidate John McCain.
In his annual address, Mr Obama walked a fine line by spelling out his philosophical blueprint to recharge the nation’s fortunes with spending boosts in key areas like education and clean energy, while at the same time promising a leaner government and a five-year spending freeze on some domestic programmes.
With an increasingly competitive global economy, the U.S. has no choice but to ‘outinnovate, outeducate and outbuild the rest of the world,’ he said.
Unbowed, the president tried to hammer down the message in a speech today in Manitowoc, Wisconsin - a battleground state that will be critical to his re-election prospects.
He said that while China invested in clean energy technologies 'we fell down on the job. We weren't moving as fast as we should have.
'We're going to need to go all in. We're going to need to get serious about winning the future.'
But a top economist insisted that the president’s plan to freeze spending is just ‘spare change’ compared to the size of the deficit.
Speaking at the World Economic Forum in Davos, Switzerland, Nouriel Roubini said major spending reforms were needed and he claimed the US would eventually have to raise taxes for both the rich and the middle class.
In his official response to Mr Obama’s address, Republican House Budget Committee Chairman Paul Ryan insisted the administration’s actions ‘show they want a federal government that controls too much, taxes too much and spends too much in norder to do too much.
‘Endless borrowing is not a strategy,’ he added.
Watching on: First lady Michelle Obama, right, with (from left) John, Dallas and Roxanna Green, family of the late Christina Green of Tucson, before Mr Obama's speech
Welcomed to Congress: Amid wild applause Mr Obama greets members of Congress as he arrives for a Joint Session to deliver his speech
Republican Congresswoman Michele Backmann, a leading figure in the anti-establishment Tea Party movement, added: ‘Instead of cutting, we saw an unprecedented explosion of government spending and debt unlike anything we have seen in the history of our country.’
The National Taxpayers Union Foundation went so far as to calculate the agenda outlined by Mr Obama would cost an additional $20 billion and lead to higher taxes.
'President Obama's speech last night hinted at tax reform, and spending restraint, but also opened the door to tax increases and major spending initiatives,' said NTUF Senior Policy Analyst Demian Brady.
'Americans heard encouraging words about more efficient government, but little in the way of specifics about spending priorities,' he added.
Property magnate Donald Trump also took issue of the way Mr Obama held up China as an example to the world in his hour-long speech.
‘I though the low point was when he talked about how great China was,’ said Mr Trump. ‘I understand the Chinese and I understand they are not a friend of this country,’ he added.
There was also some confusion over Mr Obama’s reference to ‘our generation’s Sputnik moment.’
‘Half a century ago, when the Soviets beat us into space with the launch of a satellite called Sputnik¸ we had no idea how we’d beat them to the moon. The science wasn’t there yet. NASA didn’t even exist,’ said Mr Obama.
‘But after investing in better research and education, we didn’t just surpass the Soviets; we unleashed a wave of innovation that created new industries and millions of new jobs,’ he added.
Even though the surprise Soviet launch of the Sputnik missile in 1957 spurred the US to create NASA and eventually win the space race to the moon, critics questioned yesterday whether it was wise to revisit such a low point in the country’s past.
Bizarrely, Manitowoc, a small city on the shores of Lake Michigan, has a connection to the Sputnik - a 20 lbs chunk of the satellite fell from the sky and crashed there in 1962.
Mr Obama said it was a fluke that he chose the city. He wanted to showcase a power technology company called Orion Energy Systems.
But he told supporters: 'It was part of a satellite called Sputnik that landed right here and that set the Space Race in motion. So I want to say to you today that it's here, more than 50 years later, that the race for the 21st century will be won.'
Captive audience: Members of Congress, still on their feet and applauding Mr Obama as he takes his place, prepare to listen to a speech focussing on jobs and strengthening the economy
'Winning the future': The bulk of Mr Obama's speech focussed on the fact that America needed to work hard to reclaim its place as the leader of the world. Congress regularly responded with standing ovations
Absent friends: The seat reserved for Republican Gabrielle Giffords, remains empty during the president's address. His mention of the injured Congresswoman drew immediate applause from her colleagues
No comments :
Post a Comment