President Barack Obama on Monday unveiled budget plans that would reduce the US government deficit from 10.6 per cent of gross domestic product in 2010 to below 4 per cent by 2014.

In cash terms, the deficit would peak at $1,556bn this year – even higher than the $1,413bn deficit in 2009 – then gradually decline to $706bn in 2014 before starting to drift up again. The 10-year cumulative deficit from the fiscal year 2011 to 2020 would come in at $8,532bn.

The 2011 budget proposals are insufficient to reduce the deficit to the 3 per cent of GDP level that would be consistent with a stable ratio of debt to GDP. But Mr Obama said the blame lies with the previous Bush administration which cut taxes and engaged in two wars “without paying for any of it”.