Washington: In an effort to revitalize the American economy that is facing a debt of historic proportion, the US President Barack Obama on Tuesday proposed five-year freeze on annual domestic spending.
"I am proposing that starting this year, we freeze annual domestic spending for the next five years. This would reduce the deficit by more than USD 400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was president," Obama said in his State of the Union Address.
The US annual domestic spending represents little more than 12 percent of the country budget.
"The freeze will require painful cuts, he said, "Already, we have frozen the salaries of hardworking federal employees for the next two years. I have proposed cuts to things I care deeply about, like community action programs," the US President said.
The Secretary of Defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without, he added.
A critical step - in winning the future is to make sure we aren't buried under a mountain of debt, he said.
Obama said the cuts would not include state expenditure on retired and vulnerable including the people with disabilities.
"Let’s make sure what we're cutting is really excess weight", he said.
Signaling a break from Republic stance on giving tax sops for wealthy to encourage business investment, Obama hinted at ending tax exemption for the wealthiest two percent of Americans.
"Before we take money away from our schools, or scholarships away from our students, we should ask millionaires to give up their tax break. It's not a matter of punishing their success. It's about promoting America's success," he said.
Obama also proposed for simplification in individual tax codes.