US President Barack Obama oulined a proposal Wednesday to eliminate 4 trillion dollars in the federal deficit within 12 years by making broad cuts in government spending and by raising taxes on the nation's highest incomes, dpa reported.
In a major showdown with Republicans in Congress over how to go about reducing the country's ballooning national debt now forecast at 14.3 trillion dollars, Obama outlined reductions in spending across the government, as well as reforms to entitlement programmes like Medicare and Medicaid and to the tax code.
"Any serious plan to tackle our deficit will require us to put everything on the table, and take on excess spending wherever it exists in the budget," Obama said.
Overall, the White House plan would reduce annual deficit spending to 2.5 per cent of gross domestic product by 2015.
With a record 1.6 trillion dollars in deficit spending for fiscal 2011, the current deficit rate compared to GDP stands at about 10 per cent. That figure is one of the highest in the world for a developed country and has worries the US could be headed to a major financial crisis.