UPDATED:
In broad strokes, President Obama’s first budget takes him well beyond his goal of immediate economic recovery to put his stamp on the entire operation of the federal government — from a new global warming cap-and-trade scheme to creating a new mandatory spending program to doubling U.S. foreign aid.
The budget calls for spending nearly $4 trillion this year, or more than a quarter of the nation’s economy. It also projects a $1.7 trillion deficit this year, which is more than three times the previous record, and a $1.1 trillion deficit in 2010.
In the brief document — his full, detailed budget will come in April — Mr. Obama lays out a host of new spending priorities, tax increases and new fees, but very few cuts.
The $2 trillion in “savings” over the next decade he promised Congress Tuesday comes more from tax and fee increases on high-income earners and greenhouse-gas emitting companies than from budget cuts.
Click here to see a PDF of document.
Seeking to get ahead of the flood of red ink, Mr. Obama, in brief remarks to reporters, went beyond the document’s details to promise a few more cuts. He said he would find savings of $20 billion from the agriculture cuts; $200 million from stopping coal mine recovery payments to mines that have already been cleaned up; tens of millions of dollars by stopping an “ineffective” mentoring program; and $50 billion in stopping “overpayments and tax loopholes.”
“We will, each and every one of us, have to compromise on certain things we care about,” he said in promising more cuts to come.
Coupled with requests for hundreds of billions of dollars to continue bailing out financial institutions and with the $787 billion stimulus spending bill he signed last week, Mr. Obama is already facing harsh criticism.
Republicans, while slamming Mr. Obama’s proposed tax increases on high-income earners, which would also affect some small businesses, blamed overspending on congressional Democrats, pointing to more than $1 trillion in spending Congress has either already passed or is poised to pass this year.
“We dont believe these are the kind of choices the president is talking about, however it appears Democrats on Capitol Hill either havent heard his message, or simply dont care,” said House Minority Whip Eric Cantor, Virginia Republican.
Among Mr. Obama’s new proposals are increasing Pell Grants for low-income students to go to college and making the program part of mandatory spending, which takes away some of Congress’ ability to control costs.
He laid out the broad outlines of a cap-and-trading scheme to control greenhouse gas emissions. Beginning in 2012, the plan would auction off pollution credits that companies could then trade with each other, making those companies who pollute the most pay the most.
The president also called for U.S. foreign assistance to double to $50 billion as part of an effort to “help bring stability to other parts of the globe and greater security for our nation.”
Mr. Obama assumes a slightly better economic scenario than economists, including better employment and higher gross domestic product this year and next.
Unlike Tuesday, when Mr. Obama promised Congress he had identified $2 trillion worth of savings over the next decade, the budget is nearly silent on specifics.
The largest chunks of that “savings” comes in higher taxes and fees: from repealing Bush tax cuts on individuals earning $200,000 or families making $250,000, and from the auction for carbon pollution credits, which he says would raise $665 billion over 10 years.
Mr. Obama did propose cutting farm payments to farms with incomes higher than $500,000 and reducing other agriculture programs to save money, but most of that savings he would spend on boosting the child nutrition program.
Mr. Obama envisions giant deficits — bigger than any the federal government has ever racked up — and sees the government’s debt reaching $23 trillion in 2019 — well more than double the debt at the end of 2008, which stood at $10 trillion.
As important as what Mr. Obama includes is what Bush administration items he cut out.
No longer does the budget include an item for personal Social Security accounts, which Mr. Bush called for in his annual budgets long after that prospect had died on Capitol Hill.
And Sen. Harry Reid, Nevada Democrat, told his constituents Wednesday night Mr. Obama has also decided not to pursue storing nuclear waste at the proposed Yucca Mountain facility in Nevada — something Mr. Bush had sought, but environmentalists and local politicians had fought vehemently.
“President Obama has made a critical first step towards fulfilling his promise to end the Yucca Mountain project, and I could not be happier for the people of Nevada,” Mr. Reid said in an e-mail to supporters.
Mr. Obama used his brief remarks to announce more money was flowing from his $787 billion economic stimulus plan, something he’s done nearly every day since signing it into law last week.
Calling it “good news,” the president said starting Thursday the government would subsidize COBRA, the health care program for recently out-of-work employees.
He did not give a dollar figure attached to the payment.
“At a time when health care is too often too expensive for the unemployed, this critical step will help 7 million Americans who’ve lost their jobs keep their health care,” he said, framed by his economic team.
“That’s 7 million Americans who will have one less thing to worry about when they go to sleep at night.”
Mr. Obama said his plan “has only just begun to yield benefits for the American people.”
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