President Barack Obama proposed a budget Monday that would cut the U.S. deficit by $1.1 trillion over the next 10 years, but Republicans said it did not curb spending deeply enough.
Conservatives accuse Obama, a Democrat, of being a tax-and-spend liberal, and they aim to make the 2012 presidential election a referendum on his fiscal track record.
Obama said his plan was a balance between deficit reduction pain and investment for growth. But it only provided a general guide on how to tackle entitlement outlays that include the Social Security and Medicare programs responsible for huge government spending.
"The fiscal realities we face require hard choices," he said in a message to Congress accompanying the budget.
"A decade of deficits, compounded by the effects of the recession and the steps we had to take to break it ... has put us on an unsustainable course. That's why my budget lays out a path for how we pay down these debts," he said.
Obama's $3.729 trillion budget proposal for fiscal 2012 shows the deficit rising to $1.645 trillion in fiscal 2011, then falling sharply to $1.101 trillion in 2012.
This trend would trim the deficit as a share of the U.S. economy to 3.2% by 2015 from 10.9% this year, and meet a pledge Obama made to his Group of 20 partners to halve the deficit by 2013. The news was well-timed, with G20 finance ministers meeting in Paris on Friday and Saturday.
"You've got both parties looking to reduce the deficit, it at least says that they are both looking at the same idea, that if we want to get elected we need to be deficit responsible," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.
The budget shows the deficit steadying around 3 percent of gross domestic product from 2015 onward, slowing the rate at which the U.S. adds to its debt, although it will still climb to 77 percent of GDP by 2021, up from 72% in 2011.
Obama's budget for fiscal 2012 is a proposal to Congress laying out the president's policy priorities.
Months of wrangling will now follow with Republicans in Congress, who control the House of Representatives and increased their seats in the Senate after November elections in which they campaigned on deep cuts in federal spending.
"The president talks like someone who recognizes that spending is out of control, but so far it hasn't been matched with action," U.S. Senate Republican leader Mitch McConnell said in a statement. "Americans don't want a spending freeze at unsustainable levels. They want cuts, dramatic cuts. And I hope the president will work with us on achieving them soon."