Obama presents $3.8 trillion budget

WASHINGTON — President Barack Obama on Monday sent Congress a federal budget for the coming fiscal year that projects a near-record $1.27 trillion deficit, saying he would create a bipartisan commission to find ways to bring down government spending.

“We simply cannot continue to spend as if deficits
don’t have consequences, as if waste doesn’t matter, as if the
hard-earned tax dollars of the American people can be treated like
Monopoly money, as if we can ignore this challenge for another
generation.  We can’t,” Obama said.

But despite the president’s call for a new
commitment to stemming the tide of red ink, the immensity of the
challenge was immediately clear.

Republicans denounced the $3.8 trillion spending blueprint for the fiscal year beginning Oct. 1. They dismissed the deficit reduction panel as a political ploy, saying they would not participate.

“We’ve already discussed it with many members of our
caucus and there’s no enthusiasm at all for this kind of commission —
precisely because it’s a cover for their desire to significantly
increase taxes,” said Rep. Tom Price, R-Ga., chairman of the House Republican Study Committee.

Beyond politics, actual federal spending is determined primarily by Congress, not the White House — regardless of the party in power. And the bulk of Obama’s budget — like those of his predecessor, George W. Bush — involves spending on programs that congressional Democrats and Republicans have both been reluctant to curb — Social Security, Medicare and defense.

Together, those three account for about 60 percent of the new Obama budget.

Reflecting that reality, Obama proposed a freeze on
the overall level of discretionary spending, though not on national
security functions nor on entitlement programs such as Social Security, Medicare and Medicaid

In other areas, both the president’s proposed
spending increases and his calls for reductions or increased revenues
are likely to spark controversy.

The budget contains a $100 billion
jobs package that includes small business tax cuts and infrastructure
and clean energy investments. It would raise public school funding by 6
percent and increase the Pell Grant for needy college students to
almost double what it was when Obama took office.

The president proposed cutting NASA’s budget and turning away from its goal of returning men to the moon — proposals likely to spark resistance in Florida, a politically critical state.

Equally controversial was the call for saving $2.5 billion by cutting production of the C-17 cargo plane. The Pentagon has long maintained that it has enough of the planes, which are built in Southern California, but Congress has restored funding to keep the production line open and running anyway.

Republicans were quick to jump on Obama’s proposal to allow the Bush tax cuts for households making more than $250,000 a year expire, which would generate $678 billion over 10 years.

“Just three days after talking to House Republicans about the importance of fiscal responsibility, President Obama is submitting another budget that spends too much, taxes too much, and borrows too much,” said House Republican leader John Boehner of Ohio

At $3.8 trillion, the overall price tag reflects growth of 3 percent over current spending for the fiscal year ending Sept. 30.

In addition to the $1.27 trillion deficit projected for fiscal year 2011, the administration now projects the current-year deficit will hit a record $1.6 trillion, a figure that added to the long-term concern of deficit hawks and fueled GOP attacks on Democrats as reckless spenders.

In turning to a blue-ribbon deficit panel, Obama invoked a familiar Washington strategy for dealing with issues fraught with anxiety for politicians worried about re-election.

His goal is cutting deficits to no more than 3
percent of the economy, a level many economists consider sustainable,
by the year 2015. The current year deficit, if it hits the new
projection of $1.6 trillion, would be nearly 11 percent of the economy.

Last week, the Senate voted down a proposed deficit-cutting commission. So Obama is setting it up by executive fiat instead.

One proposal circulating on Capitol Hill would create an 18-person commission made up of both Republicans and Democrats. The House, Senate and Obama administration would each appoint six people to serve.

Vice President Joe Biden sent a letter to Sen. Kent Conrad, D-N.D.,
last week spelling out the timetable for action on the commission’s
work. Biden wrote that he had reached an agreement with the House and Senate leadership to put the commission’s recommendations on the Senate calendar by January 2011 — before the end of the 111th Congress.

If the Senate passes the measure, the House would commit to voting on “whatever has passed the Senate” by that same deadline, according to Biden’s letter.

White House aides believe they can drive down the deficit to
about 4 percent of the economy by 2015 through the combination of an
improving economy, the partial spending freeze, taxes and new fees. But
to hit that 3 percent deficit target, the Obama administration said it
must put in place the independent, bipartisan commission.

Peter Orszag, director of the Office of Management and Budget,
told reporters Monday, “We put forward proposals to get us part of the
way there. The commission will have to get us the rest of the way
there.”

What if Republicans refuse to participate? White House
officials said that Republicans have endorsed such commissions in the
past. Indeed, they said they are modeling Obama’s commission on an idea
embraced by Republican Sen. Judd Gregg of New Hampshire.

Dan Pfeiffer, White House communications
director, said in an interview: “I’m still mystified why they would not
want to participate. They should participate in the process, come to
the table, bring their ideas and we’ll have a conversation. I’m not
sure why they would rule that out at the front end.

“Everyone agrees that to solve our deficit problems,
we need a bipartisan solution. And this commission is a bipartisan
process. The question is, will the Republicans, who have spent a lot of
time this year talking about deficits, do more than talk the talk? Will
they walk the walk?”

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(c) 2010, Tribune Co.

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