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President Obama proposes $3.7 billion plan to slash deficit

by Adam Russett on February 14, 2011

President Obama proposes $3.7 billion plan to slash deficit

In a move that will likely be touted by some Democrats as too harsh and by Republicans as too lenient, President Obama has revealed a plan that will cut or reduce the funding of hundreds of federal programs, but still provide new budgets for transportation, education and research initiatives, according to Politics Daily.

The hope is that the proposal will successfully reduce the $1.7 trillion deficit to $600 billion by 2018.

Transportation will be one of the biggest focuses of the bill, as the industry will be strengthened by a $50 billion boost. This seems to be in line with Obama's State of the Union announcement that the country will have high-speed railway systems in the near future. Both energy and medical research will also be funded, with the Nationals Institutes of Health receiving a total of $740 million.

Unfortunately, these bonuses will come at a cost. Medicare and Medicaid cuts may raise the most ire, as the federal programs will have their budgets reduced by $62 billion. This will be implemented by lower reimbursement prices for care providers – which may discourage some physicians from treating beneficiaries – as well as an expanded program for generic drugs.

Graduate students may suffer from the new budget, as federal loans for the group will begin gaining interest during their time at school, instead of being deferred. Financial assistance through the form of the Pell Grant will also be slashed for those who need the funds to attend summer classes.

Critics of the proposal have already rallied together, because much of Obama's plan has ignored the recommendations of the bipartisan deficit commission, according to The Washington Post.

"The country's biggest challenge, domestically speaking, no doubt about it, is a debt crisis. . . . It looks like the debt is going to continue rising under this budget," House Budget Committee chairman Paul Ryan (R-Wis.) said on Fox News Sunday.

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