Debt Crisis: President Obama commits to $3 trillion in budget cuts to avoid recession
US President Barack Obama has called for cuts of $3 trilllion (€2.2 trillion) between now and 2020 in a bid to rein in spending as sovereign debts both in Europe and America threaten to push the world economy into another recession.
He is looking for additional spending cuts of $1.5 trillion and warned Congress that if a package that includes taxes for the richest Americans, known as the Buffet rule, is not forthcoming he will use his veto.
It is understood that around $800bn will come from letting tax cuts for the wealthy expire.
There are five principles in his tax reform plan including the lowering of taxes and cutting breaks which it is hoped will lead to job creation.
However, it is understood the President is not recommending any major changes to his controversial Medicare plan like the raising of the eligibility age.
The move comes on a day of continued uncertainty on international stock markets as fears of a Greek default refuse to abate.
Investors had also hoped that the unusual appearance of US Treasury Secretary Timothy Geithner at a meeting of eurozone finance ministers at the weekend would have brought some calm to the markets but that did not materialise.
Some eurozone ministers, including Germany’s Wolfgang Schaeuble, poured cold water on Mr Geithner’s suggestion the Europe should increase the size of its €440bn bailout package as part of a plan to ease the debt crisis.