President Barack Obama plans to increase taxes on the wealthy and cut spending for the war in Iraq as part of a plan to slash the U.S. budget deficit to $533 billion by the end of his first term, according to an administration official, Bloomberg reported.
Obama wants to reduce the deficit because he's concerned that over time, federal borrowing will make it harder for the economy to grow and create jobs, said the official, speaking on the condition of anonymity.
The deficit Obama inherited on taking office last month was $1.3 trillion. The administration is scheduled to hold a so- called fiscal-responsibility summit at the White House tomorrow, with about 130 people invited, including about 50 members of the House and Senate from both parties. An overview of Obama's budget proposal for the 2010 fiscal year, which begins Oct. 1, will be released Feb. 26.
"We have been on an incredible spending spree," Senate Minority Leader Mitch McConnell said today on CNN. "So I think it's timely that the president's having a meeting at the White House tomorrow to talk about the deficit because we're spending money at a very, very rapid pace, far beyond anything in history."
Most of the savings will be realized from increased revenue from Americans making more than $250,000 a year and winding down the war in Iraq, said the official. The New York Times said yesterday Obama will propose letting President George W. Bush's tax cuts for the wealthy lapse in 2010.
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