Wednesday, January 26, 2011

Obama's Spending Freeze Just 'Spare Change': Roubini

Obama's Spending Freeze Just 'Spare Change': Roubini

The White House plan to partially freeze government spending is just "spare change" compared to a budget deficit of more than $1 trillion and eventually the US will have to raise taxes, economist Nouriel Roubini of Roubini Global Economics told CNBC Wednesday.

President Barack Obama proposed a five-year freeze on non-discretionary defense spending for five year to lower the deficit by about $400 billion.

But more actions will be needed to seriously tackle the deficit, Roubini said at the World Economic Forum in Davos, Switzerland.

The government will have to work on reform on entitlement programs like Social Security and "also eventually raise taxes for both the rich and the middle class," he said.

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