President Obama, with Vice President Joseph R. Biden Jr. and Treasury Secretary Timothy F. Geithner, spoke about the budget on Thursday at the Eisenhower Executive Office Building in Washington.
President Obama’s new budget blueprint estimates a stunning deficit of $1.75 trillion for the current fiscal year, which began five months ago, then lays out a wrenching change of course as he seeks to fund his own priorities while stanching the flow of red ink.
The latest on President Obama, the new administration and other news from Washington and around the nation. Join the discussion.
By redirecting enormous streams of deficit spending toward programs like health care, education and energy, and paying for some of it through taxes on the rich, pollution surcharges, and cuts in such inviolable programs as farm subsidies, the $3.55 trillion spending plan Mr. Obanma is undertaking signals a radical change of course that Congress has yet to endorse.
The deficit he inherited, a shortfall of more than $1 trillion as the current fiscal year began, has continued to swell in recent months with additional bank bailouts, the first wave of spending from the newly enacted stimulus plan and the continuing costs of the wars in Iraq and Afghanistan.
The administration, as it had announced, will try to cut that amount sharply by 2013, when Mr. Obama’s first term ends, to $533 billion, even as it escalates spending on crucial priorities.
“There are times when you can afford to redecorate your house,” Mr. Obama said on Thursday morning as he released an outline of the budget for the next fiscal year, which begins in October, “and there are times when you have to focus on rebuilding its foundation.”
His administration will attempt to close the large fiscal gap even while starting a major health-care initiative meant to substantially extend coverage; to do so, it foresees increasing taxes on the wealthiest Americans and using revenues from a new program: selling carbon credits to manufacturers as part of a cap-and-trade plan meant to slow climate change.
Further savings would come from such items as a proposal to phase out government payments to crop producers making more than $500,000. Additional revenues are posited from a tightening of tax-code enforcement.
"Having inherited a trillion-dollar deficit that will take a long time for us to close, we need to focus on what we need to move the economy forward, not on what’s nice to have," Mr. Obama said.The budget plan projects the deficit falling to $1.17 trillion in 2010 and down to Mr. Obama’s goal of $533 billion in 2013, then increasing again to $712 billion by 2019. Mr. Obama takes credit for $2 trillion in deficit reduction over 10 years, three quarters of which comes from lower expenses in Iraq and Afghanistan and most of the rest to tax increases on the wealthy and revenues from a market-based cap on greenhouse gas emissions.
The budget projects slightly lower spending on the Iraq and Afghanistan wars to $130 billion in the 2010 fiscal year, then a much larger drop beginning in the 2011 fiscal year, when Mr. Obama wants to withdraw combat forces from Iraq. The basic military budget in 2010 would be $534 billion in 2010, according to officials who described its outlines before the formal release of the proposal.
Mr. Obama promised to include the full costs of the wars in all his budgets, saying that because of “dishonest accounting” past budgets have “not told the whole truth about how precious tax dollars are spent. Large sums have been left off the books, including the true cost of fighting in Iraq and Afghanistan.”
The deficit, which at 12.3 percent of gross domestic product is expected to touch its highest level since 1945, could grow this year if the economy worsens significantly and a new infusion of capital into distressed banks is ordered; the administration has estimated that this might call for adding $250 billion to the cost of the bailout already approved by Congress.
"No part of my budget will be free from scrutiny or untouched by reform," Mr. Obama said, in a nod to critics who have suggested that the economic rescue package includes runaway waste.
"I don’t think that we can continue on our current course," he added.
The new proposal for the coming fiscal year and beyond includes many ambitious and costly programs that would have to be approved by Congress, including some that Republicans and fiscal hawks are likely to oppose.
The tax proposal to help pay for health care, coming after recent years in which wealth has become more concentrated at the top of the income scale, introduces a politically volatile edge to the Congressional debate over Mr. Obama’s domestic priorities.
The president also proposed, in the 10-year budget outline he released Thursday, to use revenues from the centerpiece of his environmental policy — a plan under which companies must buy permits to exceed pollution emission caps — to pay for an extension of a two-year tax credit that benefits low-wage and middle-income people.
No comments:
Post a Comment