In $3.8 Trillion Budget, Obama Pivots to Trim Future Deficits

WASHINGTON — President Obama sent Congress on Monday a proposed budget of $3.8 trillion for the fiscal year 2011, saying that his plan would produce a decade-long reduction in the deficit from $1.6 trillion this year, a shortfall swollen by $100 billion in additional tax cuts and public works spending that he is seeking right away.

“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 money of the American people can be treated like Monopoly money,” Mr. Obama said at the White House.

But at the end of the decade, the yearly deficits would begin moving up again, as the projected costs of health and retirement programs for an aging population start to escalate, according to forecasts in the administration’s new blueprint.

No budget proposal is ever enacted wholesale by Congress, and the spreadsheet-boggling numbers in the White House plan are sure to produce anguished partisan and ideological debates over how best to address the deficit and the nation’s lingering economic problems between now and the start of the new fiscal year next Oct. 1 — if indeed Congress manages to complete its work by then, right before the midterm elections.

“We won’t be able to bring down this deficit overnight,” Mr. Obama told reporters, saying that his budget includes investments in education and other areas that are critical to the country’s future. “We will continue to do what it takes to create jobs.”

The president said that the proposed budget was built around the goal of turning the country around “after what can only be described as a decade of profligacy.”

In brief remarks in the Grand Foyer at the White House, the president outlined the principles contained in his budget, saying: “Changing spending as usual depends on changing politics as usual.” He offered several examples of programs he believes should be eliminated and urged Congress to follow suit.

“I’m asking Republicans and Democrats alike to take a fresh look at programs they supported in the past to see what’s working and see what’s not and trim back accordingly,” Mr. Obama said.

He said that his proposal to freeze many domestic programs for three years as a down payment involves “hard choices and painful tradeoffs not seen in Washington for many years.” Yet with the debt accumulated from the deficits of the past decade, he acknowledged, “our fiscal situation remains unacceptable.”

So he will ask a yet-to-be-named bipartisan commission to recommend by December a plan to balance the operating budget by fiscal year 2015, not counting the growing payments on the country’s amassed debt. Congressional leaders have committed to hold a vote on whatever plan such a commission produces.

The senior Republicans on the House and Senate Budget committees, Senator Judd Gregg of New Hampshire and Representative Paul D. Ryan of Wisconsin, each used the same phrase to criticize the Obama budget: “more of the same.”

Mr. Ryan called the budget “a very aggressive agenda of more government spending, more taxes, more deficits and more debt — with just a few cosmetic budget maneuvers to give the illusion of restraint.”

Mr. Ryan’s own blueprint for a balanced budget relies heavily on changes in the system of Medicare benefits for future recipients, the kind of proposal that would surely provoke an outcry among Democrats.

The president’s pivot from stimulus spending to deficit reduction in the budget for the coming fiscal year assumes that the economy will have fully recovered from the worst recession in eight decades.

But because the recovery remains fragile and unemployment high, Mr. Obama is first seeking the additional stimulus measures he has outlined in recent days, including a new tax credit for small businesses that hire new employees or raise the pay of existing workers. That sum is less than the $154 billion package the House approved in December, but more than the Senate has been planning for.

A $1.6 trillion deficit for this fiscal year, which ends Sept. 30, would be about $150 billion greater than the shortfall in 2009, which was the highest since World War II. It would equal almost 11 percent of the gross domestic product. Economists generally consider anything above 3 percent to be unsustainable over the long haul, although many say it is a necessary evil at a time of deep economic distress.

For 2011, Mr. Obama’s budget projects a slightly lower deficit of $1.3 trillion — about the level he inherited when he took office. That would be about 8.3 percent of gross domestic product, budget documents show.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s