Obama's Bid to Beat the Deficit: Tax the Rich
THE AUSTRALIAN: BARACK Obama has set the scene for an ideological battle in next year's presidential election, announcing tax increases for the wealthy.

The proposed hike is part of his plan to reduce the federal budget deficit by $US4 trillion ($3.8 trillion) over 12 years.

In a break from his conciliatory style, Mr Obama has ripped into his Republican opponents for trying to put the burden of deficit reduction on the poor and elderly while continuing to cushion the wealthy.

The President announced a broad plan for reducing the US budget deficit yesterday, including cuts to government health programs and defence spending.

But he raised Republican hackles by refusing point blank to extend tax cuts introduced by the Bush administration for people earning more than $US250,000 a year.

Mr Obama said he had agreed to renew the tax cuts for high-income earners once, as part of a deal with Republicans to guarantee cuts for the middle class. "I refuse to renew them again," he said. » | Brad Norington, Washington Correspondent | The Australian | Friday, April 15, 2011

Inflation and Public Borrowing Add to Budget 2011 Headaches
THE GUARDIAN: • Consumer price index hits 4.4% for February • Public sector net borrowing for February at £10.3bn • Hopes dashed of big cut in deficit • News increases chance of cautious budget package

George Osborne was handed a double dose of unwelcome pre-budget news on Tuesday when official figures showed inflation leaping to 4.4% and public borrowing hit its highest February level since modern records began in 1993.

With the chancellor putting the finishing touches to his second package of fiscal measures, the rise in inflation put additional pressure on the Bank of England to raise interest rates while the deterioration in the public finances put paid to City hopes that borrowing in 2010-11 would significantly undershoot the government's £148bn target.

The disappointing economic news increases the chances of a cautious package from Osborne on Wednesday. The setback to the public finances gives the chancellor even less scope for budget giveaways and he will see a tough fiscal stance as necessary to prevent the Bank from raising interest rates.

Higher heating costs, the soaring price of oil and mark-ups from clothing and footwear retailers were mainly responsible for the increase in the consumer prices index measure of inflation from 4% to a 28-month high of 4.4%, according to the Office for National Statistics. » | Larry Elliott, economics editor | Tuesday, March 22, 2011

THE GUARDIAN: Inflation hits 4.4% in February: Retail prices index, which includes housing costs, hit 5.5% - its highest level since July 1991 » | Graeme Wearden | Tuesday, March 22, 2011

Bank of England Governor Mervyn King Warns Unions Accept Cuts or 'Fail Your Children'
THE TELEGRAPH: Meryn King, the Governor of the Bank of England, has urged the unions to accept public sector reforms and jobs cuts by warning that anything short of tackling the UK's record Budget deficit would “fail the next generation”.



Addressing the Trades Union Congress, he described the current deficit as “unsustainable” and, in an implicit defence of the Coalition's policy, argued that “the current plan ... to reduce the deficit steadily over five years [is] a more gradual fiscal tightening than in some other countries”.

“Vague promises would not have been enough,” he told the Manchester conference, where union leaders have described the Government as the “Demolition Coalition” and threatened civil disobedience in protest at the planned reforms.

“Market reaction to rising sovereign debt can turn quickly from benign to malign, as we saw in the euro area earlier this year. It is not sensible to risk a damaging rise in long-term interest rates that would make investment and the cost of mortgages more expensive,” Mr King said.

“The costs of this crisis will be with us for a generation. And we owe it to the next generation to seize this opportunity to put in place the reforms that will make another crisis much less likely and much less damaging.”

He stressed that reducing the Budget deficit, which is forecast to hit £149bn this year – the largest peacetime deficit in history and the biggest as a proportion of GDP in Europe, is one of a number of necessary reforms, and will require co-operation from the unions. >>> Philip Aldrick, Economics Editor | Wednesday, September 15, 2010