Obama to Slash Federal Deficit by Withdrawing Troops and Raising Taxes on Rich

It seems unbelievable that after approving a $787 billion Economic Stimulus Package, President Obama could keep his campaign promise to reduce the federal deficit, but that’s exactly what he plans to do.

Thanks to the Bush administration, the current US deficit is over $1 trillion (not including the economic stimulus package). Obama plans to cut this deficit in half by 2013. Is this even possible?

President Obama has stated in discussing the economy:

No single piece of this broad economic recovery can, by itself, meet the demands that have been placed on us. We can’t help people find work or pay their bills unless we unlock credit for families and businesses. We can’t solve our housing crisis unless we help people find work so that they can make payments on their homes. We can’t produce shared prosperity without firm rules of the road. And we can’t generate sustained growth without getting our deficits under control. In short, we cannot successfully address any of our problems without addressing them all. And that is exactly what the strategy we are pursuing is designed to do.

It appears Obama understands what anyone responsible for their own personal finances gets:  You can’t solve your debt problems by creating more debt. Spending money will not solve our current economic crisis unless we address the complete problem, as Obama expressed.  George W. Bush never got it.

Obama’s plan to reduce the federal deficit relies on troop withdrawal from Iraq and raising taxes on the wealthiest Americans.  Actually, Obama’s budget plan would reduce the deficit by two-thirds, which is greater than his goal.  The New York Times explains the discrepancies:

His budget blueprint for the 2010 fiscal year, which begins Oct. 1, will include a 10-year projection showing the annual deficit declining to $533 billion in the 2013 fiscal year, the last year of his term, officials said.

While that suggests a two-thirds reduction, exceeding Mr. Obama’s goal of at least half, advisers note that the current deficit as a starting point is inflated by one-time expenses to stimulate the economy.

Measured against the size of the economy, the projected $533 billion shortfall for 2013 would mean a reduction from a deficit equal to more than 10 percent of the gross domestic product — larger than any deficit since World War II — to 3 percent, which is the level that economists generally consider sustainable. Mr. Obama will project deficits at about that level through 2019, aides said.

Obama will let Bush’s tax cuts for individuals who make $250,000 or more a year expire in 2010. As far as troop withdrawal from Iraq, Obama estimates this would save about $90 billion a year, although some of this savings may be deferred to increasing troops in Afghanistan.

Unlike Bush, Obama will be honest in disclosing the federal budget to the American people, which will be released in April.  Bush never reported war costs in the budget to make the deficit appear smaller.  Instead, the former president relied on supplemental money from Congress to support the war effort.  Honesty in the White House, now that’s a novel idea!