Obama budget to forecast $901bn deficit in 2013

WASHINGTON: President Barack Obama will project a $901 billion deficit for fiscal 2013 in his upcoming budget proposal, a sharp drop from the funding gap this year, a White House official said on Friday.

Obama's proposal to Congress on Monday represents a budget deficit forecast in 2013 equivalent to 5.5 percent of US gross domestic product (GDP), down from 8.5 percent of GDP in 2012when the deficit is seen hitting $1.33 trillion.

Obama, a Democrat, in September outlined the broad details of his $3 trillion-plus deficit reduction plan, which his Republican rivals slammed for raising taxes on the rich.

He is expected to repeat proposals to raise $1.6 trillion over a decade through higher taxes, included $886 billion raised by allowing tax breaks for families earning more than $250,000 a year to expire at the end of 2012.

The budget will also earmark $476 billion for infrastructure spending and $350 billion to jump-start job creation, the official said.

These plans were announced in Obama's State of the Union address last month, in which he called for more action to improve economic fairness in American.

Spending has already been capped for 2013 in a deal between Obama and Republicans last summer to raise the US debt ceiling, and Obama last month announced defense spending cuts of$487 billion over 10 years.

The budget must still spell out where the ax falls on domestic spending, with $360 billion expected to be saved by controlling growth in the costs of Medicare and Medicaid, federal healthcare programs for elderly and poor Americans. (Reuters)