President’s Budget Promises to Upset Both Parties

Posted February 1, 2010 at 9:43am

Updated: 1:33 p.m.President Barack Obama’s $3.8 trillion budget blueprint for fiscal 2011 asks Congress to adopt a politically painful set of spending cuts and tax increases in an election year, while acknowledging that deficits will be significantly higher than the administration predicted a year ago.Aside from a proposed $100 billion jobs package focused on tax cuts and infrastructure spending, Obama’s budget request includes plenty for both liberals and conservatives to complain about, and it’s not clear whether he will be able to muster the votes to pass it.Liberals already are balking at Obama’s call for a three-year nonmilitary discretionary spending freeze alongside an increase in spending on the war in Afghanistan, while Republicans are ripping the blueprint for assuming that the national debt will rise another $9 trillion over the coming decade.House Appropriations Chairman David Obey (D-Wis.) declined to back Obama’s call for a domestic spending freeze, but he said appropriators would stick to Obama’s overall spending number.“We will not exceed his requested level for appropriations, but we will also not exempt any department or activity from review, including foreign aid and the Pentagon, because none of them are without waste,— Obey said.Speaker Nancy Pelosi (D-Calif.), meanwhile, had glowing words for the budget. “President Obama’s budget directly tackles our nation’s most pressing challenges — reflecting our dedication to fiscal discipline and our commitment to keep jobs, growth, and opportunity at the top of our agenda,— she said. But the Speaker also reiterated her desire to find savings in the Defense Department. “I look forward to examining the President’s proposal to freeze spending and believe waste can be found in all departments and agencies — including the Defense Department,— she said.Obama has proposed significant increases in “security— spending from the moratorium, proposing hikes to Defense, nuclear security programs, the Department of Homeland Security, veterans’ benefits and foreign aid. Those “security— spending programs dwarf the domestic discretionary budget, $719 billion to $441 billion, not counting $159 billion in spending Obama is proposing for the wars in Iraq and Afghanistan. That also leaves out the big entitlement programs — Social Security, Medicare and Medicaid.In remarks from the White House on Monday morning, Obama urged Democrats and Republicans to re-examine favored programs and look for cuts and to join him in a bipartisan fiscal commission to slice the deficit further.And while he is looking to halt increases in discretionary domestic spending, he also targeted the military’s C-17 transport for termination, saving $2.5 billion. Obama said the military had all the C-17s they needed four years ago.“Yet every year since, Congress had provided unrequested money for more C-17s that the Pentagon doesn’t want or need,— Obama said. “It’s waste, pure and simple.—Republicans weren’t impressed.“The president has sent us more of the same — a budget that claims to be fiscally responsible, but just below the surface contains more spending, more borrowing and more taxes,— Senate Budget ranking member Judd Gregg (N.H.) said.House and Senate Republicans noted that the annual interest on the debt will quadruple, to $840 billion in 2020 — making interest one of the fastest-growing portions of the budget.House Budget ranking member Paul Ryan (Wis.) said Obama’s budget proposal “will increase spending, deficits, taxes and debt, and hasten our nation’s march down a disastrous economic and fiscal course.— Under the plan, deficits will shrink quickly, from $1.6 trillion this year to $727 billion in 2013 assuming that the economy recovers, stimulus spending expires, the wars wind down and tax increases on the wealthy take effect.But that will require Congress to support Obama’s spending freeze and adopt his plan for nearly $1 trillion in tax increases on individuals making more than $200,000 and couples making more than $250,000 a year, and couples making more than $250,000. There are also a host of smaller initiatives that will face an army of opposition from K Street, from a $90 billion fee on large banks to $24 billion in taxes on carried interest and $39 billion by shrinking tax breaks for fossil fuel producers.Obama made the case for raising taxes to help balance the budget. “And while we extend middle-class tax cuts in this budget, we will not continue costly tax cuts for oil companies, investment fund managers, and those making over $250,000 a year. We just can’t afford it.The budget also shows how much the Obama administration misjudged the economy a year ago, when it assumed a far rosier scenario. Last year, Obama’s budget projected a $533 billion deficit in fiscal 2013, nearly $200 billion less than the new projection. And debt through 2019 is more than $2 trillion higher than Obama projected a year ago. But in the past week, Obama has sought several times to insulate himself from the gloomy numbers, arguing that all but about $1 trillion in deficits over the next decade are due to the financial mess he inherited, not his policies.