Mounting deficits may hit US global power

WASHINGTON, USA: Analysts have suggested that the mounting US debts may alter US politics and global power as President Barack Obama unveiled a record $3.8 trillion budget for 2011 with a projected $1.267-trillion deficit.

Noting that the third budget in a row with a deficit of more than $1 trillion, projects American deficits will not return to what are widely considered sustainable levels over the next 10 years, the New York Times suggested it would leave "virtually no room for new domestic initiatives for Obama or his successors".

"Beyond that lies the possibility that the United States could begin to suffer the same disease that has afflicted Japan over the past decade," the influential US daily said, noting "as debt grew more rapidly than income, that country's influence around the world eroded."

Leading financial daily Wall Street Journal said: "The budget's political pain and the difficult choices it poses for fiscal 2011 and beyond underscore the fiscal hole the nation finds itself in after a decade of deficits and a deep recession."

"It will add fuel to the election-year debate over the size and scope of government that Americans want and their willingness to pay for it," it said while pointing to "obstacles in the way of Obama's effort to close the budget gap without raising taxes on the vast majority of Americans".

The Washington Post suggested Obama, "who set out on the campaign trail three years ago to 'transform a nation', is increasingly doing all he can simply to keep his long-term vision in view amidst the more urgent pressures bearing down on him".

The budget "points to a tension he has been grappling with since taking office: how to balance the immediate needs for stimulus and deficit reduction against his agenda for sustained, broad-based growth," it said.

"But tucked alongside these efforts, both pitched to the current political moment, is the president's attempt to keep alive his initial domestic agenda in education, renewable energy and other areas."

Obama thinks these initiatives "will be necessary to produce true long-term growth after the economy claws back from recession," the Post suggested and noted that "Last year's budget proposal also made big statements in these areas, along with the third major domestic priority of health-care reform."

©IANS