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Source: USA TODAY
By Richard Wolf, USA TODAY
WASHINGTON — President Obama sent Congress on Monday a record $3.8 trillion budget for 2011 that would boost war spending, trim some domestic spending and rely on $1.3 trillion in new borrowing.
The budget would be the third in a row with a deficit of more than $1 trillion, following this year's record $1.6 trillion, a figure the White House increased in its budget. The red ink would be cut in half by 2014, mostly by allowing tax cuts on families making more than $250,000 to expire in 2011.
A year after proposing major increases for health care, energy and education, Obama is putting almost $30 billion more into the wars in Afghanistan and Iraq, boosting homeland security and international spending, and proposing a three-year freeze on some domestic spending.
"We actually show how we pay for these investments while putting our country on a more fiscally sustainable path," Obama said. "Changing spending as usual requires changing politics as usual. … We simply cannot continue to spend as if deficits don't have consequences."
The administration projects the deficit would decline to about $700 billion by 2014, or 3.9% of the nation's economy. Then it would begin to rise again — so Obama plans to create a bipartisan commission that would recommend further spending cuts and tax increases. Republicans who favor only spending cuts have not agreed to participate.
"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," said Sen. Judd Gregg, R-N.H., top Republican on the Senate Budget Committee. "After a year in office that has put us on a pace to double the debt by 2013, the president should have a tougher plan to address our fiscal crisis, because this budget will solve nothing."
A continued economic recovery and higher taxes on upper-income families would increase revenue as a share of the economy from less than 15% today to 19% in 2014. Spending would shrink from 25% to 23%.
The budget would extend President George W. Bush's tax cuts — but only for households earning less than $250,000 — as well as Obama's tax credits of $400 for individuals and $800 for couples. They would add to the deficit, despite Obama's proposal that tax cuts and benefit increases should be paid for.
"The first step is to make sure you don't dig the hole deeper," said White House budget director Peter Orszag. "Is more necessary? Sure."
The budget projects that the economy will grow at a 3% rate this year, then jump to 4.3% in 2011 and 2012. It projects a 1% inflation rate this year, gradually increasing to 1.8% before leveling off toward the end of the decade.
It also projects unemployment to remain at 10% this year, drop to 9.2% in 2011 and continue declining to nearly 5% by the end of the decade.
Taxes also would be cut for small businesses that create jobs, as part of the administration's emphasis on job creation. The budget proposes spending about $100 billion more on top of the $862 billion economic stimulus package approved a year ago. The House already has passed a larger jobs bill; the Senate is about to consider a smaller one.
Overall, the budget would increase taxes on upper-income Americans by $678 billion over 10 years, while reducing taxes by about $300 billion on middle-income families and businesses.
Democrats were restrained in their praise of the budget. Senate Budget Committee Chairman Kent Conrad, D-N.D., only lauded the fiscal commission, whose recommendations would not be binding.
Republicans opened fire immediately. "The budget the administration today submitted to Congress is nothing more than a plan for more of the same — 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," said Rep. Paul Ryan, R-Wis., top Republican on the House Budget Committee. "Despite my hope that the president would alter his course, his budget will make an already unsustainable budget outlook much worse."
•More funding for schools, Pell college grants, state governments, highways and clean energy projects.
•Funding for up to 1,000 airport body scanners, explosive-detection equipment and to put air marshals on more flights.
•A $4 billion increase in veterans' programs, including continuing an emphasis on brain injuries and mental health needs.
Among the losers: the departments of Commerce, Agriculture, Justice, and Housing and Urban Development.
In targeting 120 programs for $20 billion in savings, Obama is doing what the Bush administration started in 2006, with limited success. In that year, Republicans trimmed $6.5 billion, or 41% of what Bush sought. Democrats took over Congress in 2007 and agreed to less than $2 billion in cuts in each of the next two years. Last year, Obama pushed $6.8 billion in cuts through Congress, a 60% success rate.
Most of the targeted programs are obscure. This year, Obama wants to consolidate 38 education programs into 11 and eliminate two National Park Service grant programs. Others are prominent, such as NASA's manned moon missions.
Orszag said NASA, which has set its sights on Mars, gets a budget increase in order to "go further in space, and not just repeat what we've already done."
Congress is likely to fight some cuts, although some Republicans want even more. It's a battle the White House expected.
Said White House communications director Dan Pfeiffer: "We don't anticipate that this is going to be easy."
By Richard Wolf, USA TODAY
WASHINGTON — President Obama sent Congress on Monday a record $3.8 trillion budget for 2011 that would boost war spending, trim some domestic spending and rely on $1.3 trillion in new borrowing.
The budget would be the third in a row with a deficit of more than $1 trillion, following this year's record $1.6 trillion, a figure the White House increased in its budget. The red ink would be cut in half by 2014, mostly by allowing tax cuts on families making more than $250,000 to expire in 2011.
A year after proposing major increases for health care, energy and education, Obama is putting almost $30 billion more into the wars in Afghanistan and Iraq, boosting homeland security and international spending, and proposing a three-year freeze on some domestic spending.
"We actually show how we pay for these investments while putting our country on a more fiscally sustainable path," Obama said. "Changing spending as usual requires changing politics as usual. … We simply cannot continue to spend as if deficits don't have consequences."
The administration projects the deficit would decline to about $700 billion by 2014, or 3.9% of the nation's economy. Then it would begin to rise again — so Obama plans to create a bipartisan commission that would recommend further spending cuts and tax increases. Republicans who favor only spending cuts have not agreed to participate.
"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," said Sen. Judd Gregg, R-N.H., top Republican on the Senate Budget Committee. "After a year in office that has put us on a pace to double the debt by 2013, the president should have a tougher plan to address our fiscal crisis, because this budget will solve nothing."
A continued economic recovery and higher taxes on upper-income families would increase revenue as a share of the economy from less than 15% today to 19% in 2014. Spending would shrink from 25% to 23%.
The budget would extend President George W. Bush's tax cuts — but only for households earning less than $250,000 — as well as Obama's tax credits of $400 for individuals and $800 for couples. They would add to the deficit, despite Obama's proposal that tax cuts and benefit increases should be paid for.
"The first step is to make sure you don't dig the hole deeper," said White House budget director Peter Orszag. "Is more necessary? Sure."
The budget projects that the economy will grow at a 3% rate this year, then jump to 4.3% in 2011 and 2012. It projects a 1% inflation rate this year, gradually increasing to 1.8% before leveling off toward the end of the decade.
It also projects unemployment to remain at 10% this year, drop to 9.2% in 2011 and continue declining to nearly 5% by the end of the decade.
Taxes also would be cut for small businesses that create jobs, as part of the administration's emphasis on job creation. The budget proposes spending about $100 billion more on top of the $862 billion economic stimulus package approved a year ago. The House already has passed a larger jobs bill; the Senate is about to consider a smaller one.
Overall, the budget would increase taxes on upper-income Americans by $678 billion over 10 years, while reducing taxes by about $300 billion on middle-income families and businesses.
Democrats were restrained in their praise of the budget. Senate Budget Committee Chairman Kent Conrad, D-N.D., only lauded the fiscal commission, whose recommendations would not be binding.
Republicans opened fire immediately. "The budget the administration today submitted to Congress is nothing more than a plan for more of the same — 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," said Rep. Paul Ryan, R-Wis., top Republican on the House Budget Committee. "Despite my hope that the president would alter his course, his budget will make an already unsustainable budget outlook much worse."
•More funding for schools, Pell college grants, state governments, highways and clean energy projects.
•Funding for up to 1,000 airport body scanners, explosive-detection equipment and to put air marshals on more flights.
•A $4 billion increase in veterans' programs, including continuing an emphasis on brain injuries and mental health needs.
Among the losers: the departments of Commerce, Agriculture, Justice, and Housing and Urban Development.
In targeting 120 programs for $20 billion in savings, Obama is doing what the Bush administration started in 2006, with limited success. In that year, Republicans trimmed $6.5 billion, or 41% of what Bush sought. Democrats took over Congress in 2007 and agreed to less than $2 billion in cuts in each of the next two years. Last year, Obama pushed $6.8 billion in cuts through Congress, a 60% success rate.
Most of the targeted programs are obscure. This year, Obama wants to consolidate 38 education programs into 11 and eliminate two National Park Service grant programs. Others are prominent, such as NASA's manned moon missions.
Orszag said NASA, which has set its sights on Mars, gets a budget increase in order to "go further in space, and not just repeat what we've already done."
Congress is likely to fight some cuts, although some Republicans want even more. It's a battle the White House expected.
Said White House communications director Dan Pfeiffer: "We don't anticipate that this is going to be easy."
