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President Obama Unveils Budget Proposal

   Michael Bowman | Washington  February 14, 2011
   The  newly  published  2012  budget  documents  on display at the U.S.
   Government Printing Office at Washington, February 10, 2011

Photo: AP

   The  newly  published  2012  budget  documents  on display at the U.S.
   Government Printing Office in Washington, February 10, 2011

   U.S.  President  Barack  Obama  has  unveiled  a $3.7 trillion federal
   budget for next year that seeks to cut Americaās mammoth deficit while
   retaining   certain   spending  priorities  to  spur  future  economic
   expansion.

   Republicans,  who  control  one  house of Congress, are dismissing the
   presidentās  proposed  budget  as  a costly burden to the economy that
   fails  to address a fiscal crisis. The positions staked out constitute
   opening  bids  in  what is expected to be a protracted battle over the
   governmentās finances.
   President  Obama  says  painful  choices must be made to put Americaās
   fiscal  house  in  order. "Iāve called for a freeze on annual domestic
   spending over the next five years.Ā  This freeze would cut the deficit
   by  more than $400 billion over the next decade, bringing this kind of
   spending  -  domestic  discretionary spending - to its lowest share of
   our  economy since Dwight Eisenhower was president [in the 1950s]," he
   said.

   The   presidentās   budget   mandates   cuts   in   defense  spending,
   environmental  protection  and  many  other  government  endeavors. It
   assumes  robust  economic  growth  in  coming  years,  and  limits tax
   deductions  for  the  wealthy as well as corporate tax breaks. Overall
   projected  deficit  reduction  totals  more  than  $1 trillion over 10
   years.
   At   the   same   time,   the  proposed  budget  expands  funding  for
   infrastructure  projects,  clean  energy  initiatives  and educational
   priorities.  Speaking  at a primary school in Baltimore, Maryland, Mr.
   Obama  said America must continue to invest with an eye to the future.
   "Iām  convinced that if we out-build and out-innovate and out-educate,
   as  well  as out-hustle the rest of the world, the jobs and industries
   of  our  time  will  take root here in the United States.Ā  Our people
   will prosper and our country will succeed," he said.
   Republicans  promptly blasted the presidentās budget blueprint, saying
   it  would  add  more  than  $7  trillion to the national debt and push
   America  to  financial  ruin.  Republican  Representative Paul Ryan of
   Wisconsin  is  chairman  of the House Budget Committee. "It is not too
   late  to  right our ship, get our economy growing, get our debt headed
   in  the right direction, and get Americaās fiscal problems solved. But
   if we keep postponing this, if we keep punting [refusing to tackle the
   problem]  like this budget does, then there will come a moment when it
   is too late," he said.
   The  Senateās  top  Republican,  Mitch McConnell of Kentucky, was even
   more  blunt.  "Weāre  broke [out of money]. Weāre broke. We donāt have
   the money," he said.
   Republican legislators have yet to craft an alternative 2012 budget of
   their  own,  but  are intent on slashing current federal spending, and
   promise to keep cutting until fiscal woes are solved.
   Congressman  Ryamn  said,  "The debt crisis is caused by spending, not
   taxes. And so, letās go where the problem is, and that is spending."
   President   Obama   maintains  that  deep  spending  cuts  favored  by
   Republicans  would  harm  Americaās  future  economic  prospects,  and
   unfairly  force  the  poor and vulnerable to bear the cost of years of
   fiscal  excess.  Republicans counter that a bloated federal government
   and  ever-expanding  national  debt  will destroy the country, harming
   everyone - rich and poor alike.
   Budget   analyst  Bill  Frenzel  of  the  Brookings  Institution  says
   compromise  is  possible, if Mr. Obama and congressional Democrats are
   willing  to  consider  deeper  spending cuts, and Republicans agree to
   some  form  of increased taxation. "As long as Republicans like to cut
   expenses  and  Democrats  are not as anxious to do so and would rather
   have  a  tax  component, I think everyone will get less than they want
   from this budget," he said.
   Economists  say  neither  side in the budget debate has yet to embrace
   badly-needed  reforms  to programs that provide income and health care
   assistance  to retirees, the costs of which are expected to sky-rocket
   in  coming  years.  They  argue,  until  those  costs  are  contained,
   Americaās fiscal and economic health will continue to suffer.
   The first congressional budget votes could come as early as next week,
   but a final deal - if one can be struck - is likely months away.

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