Published February 14, 2011
President Obama sent Congress a $3.73 trillion budget Monday, a spending plan for 2012 that projects $1.1 trillion in deficit savings over the next decade but also continues adding to the national debt for years to come.
Republicans, who are still trying to cut billions out of this year's budget, slammed the proposal after giving it a quick analysis Monday morning. The top Republicans on the House and Senate budget committees said it would push $8.7 trillion in new spending while piling another $13 trillion onto the debt over the next 10 years.
"It would be better to do nothing than to pass this budget," House Budget Committee Chairman Paul Ryan, R-Wis., said Monday.
The president, visiting a school in Baltimore, said his budget reflects "tough choices and sacrifices." Obama said more will need to be done to address long-term shortfalls but described his spending plan as a "down payment" toward that effort.
"If we're going to walk the walk when it comes to fiscal discipline, these kinds of cuts will be necessary," he said.
White House Budget Director Jack Lew hit the news shows early to defend the president's proposal, saying the budget makes "real cuts" while investing in priority programs.
"You've got to start somewhere," Lew told Fox News. He said the long-term plan is to draw down the deficit to a point that can stabilize the debt. According to officials, the goal is to make sure the debt stops increasing as a share of the economy by the middle of the decade.
"By the middle of the decade, we're paying our bills," Lew said.
Senior administration officials said Obama would achieve two-thirds of his projected savings through spending cuts, including a five-year freeze on many domestic programs. The other one-third would come from tax increases, including limiting tax deductions for high-income taxpayers, a proposal Obama put forward last year only to have it rejected in Congress.
But the projected savings would be dwarfed by the $7.21 trillion in cumulative deficits over that 10-year period.
"We have no plan in this budget to pay down debt or ever come close to balancing it," Alabama Sen. Jeff Sessions, ranking Republican on the Senate Budget Committee, told Fox News.
The new estimates project the deficit for the current year will surge to an all-time high of $1.65 trillion, reflecting a sizable tax-cut agreement reached with Republicans in December. From there, the deficit in 2012 would dip to $1.1 trillion, giving the country a record four straight years of $1 trillion-plus deficits.
Though administration officials say the president will fulfill his pledge of cutting the deficit he "inherited" in half by the end of his first term, his 10-year projections show the figure persistently hovering above the already-high $458.6 billion deficit on the books in 2008, former President George W. Bush's last full year in office. Obama's 2012 budget projects the imbalances never falling lower below $607 billion.
"How is that living within your means?" Sessions said Monday.
David Walker, former U.S. comptroller general and head of the Comeback America Initiative, released a statement saying the plan was missing "concrete proposals and specific timelines" for addressing the nation's structural deficits.
"The failure of President Obama's fiscal 2012 budget to provide a path forward to address the nation's structural deficits is a major disappointment," he said.
The Obama budget recommendation, which is certain to be changed by Congress, would spend $3.73 trillion in the 2012 budget year, which begins Oct. 1, a reduction of 2.4 percent from what Obama projects will be spent in the current budget year.
The Obama plan would fall far short of the $4 trillion in deficit cuts recommended in a December report by his blue-ribbon deficit commission. That panel said that real progress on the deficit cannot be made without tackling the government's big three entitlement programs -- Medicare, Medicaid and Social Security -- and defense spending.
Obama concentrated his cuts in the one-tenth of the budget that covers most domestic agencies, projecting $400 billion in savings from a five-year freeze in this area. Some programs would not just see spending frozen at 2010 spending levels but would be targeted for sizable cuts.
The budget proposes program terminations or spending reductions for more than 200 programs at an estimated savings of $33 billion in 2012. Programs targeted for large cuts included Community Development Block Grants, trimmed by $300 million, while a program that helps pay heating bills for low-income families would be cut in half for a savings of $2.5 billion while a program supporting environmental restoration of the Great Lakes would be reduced by one-fourth for $125 million in savings.
The biggest tax hike would come from a proposal to trim the deductions the wealthiest Americans can claim for charitable contributions, mortgage interest and state and local tax payments. The administration proposed this tax hike last year but it was a nonstarter in Congress.
Obama's budget would also raise $46 billion over 10 years by eliminating various tax breaks to oil, gas and coal companies.
While Obama's budget avoided painful choices in entitlement programs, it did call for $78 billion in reductions to Pentagon spending over the next decade by trimming what it views as unnecessary weapons programs such as the C-17 aircraft, the alternative engine for the Joint Strike Fighter aircraft and the Marine expeditionary vehicle.
Another $62 billion in savings would be devoted to paying to prevent cuts in payments to doctors in the Medicare program over the next two years. Congress has for several years blocked the cuts from taking effect but the effort drove the deficits higher because lawmakers did not find offsetting savings.
The budget will propose $1 billion in cuts in grants for large airports, almost $1 billion in reduced support to states for water treatment plants and other infrastructure programs and savings from consolidating public health programs run by the Centers for Disease Control and various U.S. Forest Service programs.
While cutting many programs, the new budget does propose spending increases in selected areas of education, biomedical research, energy efficiency, high-speed rail and other areas Obama judged to be important to the country's future competitiveness in a global economy.
In the energy area, the budget would support Obama's goal of putting 1 million electric vehicles on the road by 2015 and doubling the nation's share of electricity from clean energy sources by 2035.
Republicans, who took control of the House in the November elections and picked up seats in the Senate in part because of voter anger over the soaring deficits, called Obama's efforts too timid. They want spending frozen at 2008 levels before efforts to fight a deep recession boosted spending in the past two years.
They are scheduled to begin debating on Tuesday a proposal that would trim spending by $61 billion for the seven months left in the current budget year, which ends Sept. 30. They also have vowed to push for tougher cuts in 2012 and future years.
"Americans don't want a spending freeze at unsustainable levels," said Senate Republican leader Mitch McConnell. "They want cuts, dramatic cuts."
The Associated Press contributed to this report.