Saying that "the day of reckoning has arrived" and that it is time for Americans to "take charge" of their future, President Obama is offering more details on his pledge to cut federal deficits in half by the end of his four-year term. In excerpts released before the speech, he says his administration's review of the budget has already identified $2 trillion in savings over the next decade, including ending education programs that don't work and ending direct payments to large agribusinesses. Obama also pledges to eliminate "the no-bid contracts that have wasted billions in Iraq."
Cutting the deficit in half over the next four years will be a huge challenge, especially with the U.S. economy still sliding downward and prospects for a recovery unlikely until late this year. Many economists, and even the president himself, have suggested the recovery will be slow and happen over several years. That means incomes for workers may take time to recover and tax revenues will lag. Add to that shortfall the political difficulty of ending programs like farm subsidies, and the task of cutting deficits in half is daunting. Some economists are predicting that deficits in the range of the $1 trillion-plus predicted for this year will continue for the next decade.