World News Brief, Tuesday February 2

Obama announces Budget set to grow deficit before cutting it by 2013 (+ analysis); US to build missile shield in Middle-East; Nuclear powers stalling on non-proliferation; Taiwan to buy $6.4 billion in arms; and more

Top of the Agenda: Obama Budget Concerns

US President Barack Obama announces (WSJ) his 2011 budget Monday in a difficult effort to rein in the country's ballooning debts without harming the fragile economic recovery. His $3.8 trillion budget proposal projects the deficit to rise to a record $1.6 trillion this year, but drop to roughly $700 billion, or 4 percent of gross domestic product, by 2013. Obama plans to rely on a new debt commission to propose recommendations for reducing the deficit to 3 percent of GDP by 2015, as he promised. He plans to ask for increases to spend on education and civilian scientific research, while cutting programs such as the National Park Service's Save America's Treasures and Preserve America grant program and the Advanced Earned Income Tax Credit for low-wage workers.

Obama's 2011 defense budget will avoid (WashPost) the controversial weapons cuts of last year's budget, while continuing to shift funds into weapons programs such as helicopters, unmanned planes, and Special Operations units for Afghanistan and Iraq.

The budget will be accompanied by a congressionally mandated Quadrennial Defense review, which asks the Pentagon to focus more on wars in which enemy forces hide among the populace, predicting a future dominated by "hybrid" wars where traditional states fight more like guerrillas.


A Wall Street Journal editorial says the bipartisan deficit commission is being sold as a way to force Congress to reduce federal borrowing, but really provides Democrats with political cover to raise taxes.

In the Financial Times, Clive Crook says American voters want more public services than they are willing to pay for and that the "live now, pay later" mentality that caused the economic collapse prevails. He recommends linking specific programs with specific taxes to make public choices clearer.

In this CFR Podcast, economists Allan Meltzer and Martin Baily discuss the economic and political implications of Obama's economic proposals and the reappointment of Federal Reserve Chairman Ben Bernanke.


PACIFIC RIM: US-China Relations on Taiwan

Chinese state media criticized (Reuters) the United States for a planned $6.4 billion arms sale to Taiwan, further straining the countries' bilateral relations.

Tibet-China: China said it would make no concessions (Xinhua) on Tibet's sovereignty in talks between Chinese leaders and envoys to the Dalai Lama in Beijing.



US-Iran Tensions Heighten Over Missile
Nuclear Nonproliferation Efforts Slow


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