Washington (CNSNews.com) – President Barack Obama said his $3.72 trillion budget will reduce the deficit by $1.1 trillion over 10 years, but that is well below the goal of $4 trillion called for by Obama’s own bipartisan fiscal commission in December.
Nevertheless, this budget is a good “down payment” toward a more sound fiscal future, the president’s budget director told reporters Monday in response to a question about the fiscal commission.
“There are many, many provisions in this budget that reflect the good work done by the commission,” said Jack Lew, director of the White House Office of Management and Budget.
“I think the commission did something important. It put on the table a lot of ideas, brought some degree of bipartisan consensus, but even more important civil discussion over things that have been very contentious,” Lew continued.
The president in this budget and in the State of the
The fiscal year 2012 tax and spending plans includes a number of tax hikes on oil, gas and coal producers, and imposes income tax hikes on those earning $200,000 or more. Reductions include a five-year freeze on non-defense non-discretionary spending, scaling back increases in defense spending, student assistance and heating assistance for the poor.
Meanwhile, the budget includes $148 billion increase in funding for research and development. Further, the budget proposal would increase the national debt from $13.56 trillion to $26.3 trillion by the end of 2021.
What’s more, the spending freeze that Obama has touted as a key part of deficit reduction actually looks at spending at levels created by one-time emergency laws, the $700 billion Troubled Assets and Relief Program and the $787 billion American Recovery and Reinvestment Act, both passed in fiscal year 2009, overlapping Presidents Bush and Obama.
As a result, federal spending has climbed from $2.982 trillion in fiscal year 2008 to an estimated $3.818 trillion in fiscal year 2011, according to the most recent OMB Fiscal Year 2012 Historical Tables released Monday. The proposed $3.728 trillion is a slight decrease from the previous fiscal year.
The Obama proposal would also reduce the deficit to three percent of the gross domestic product by 2017, but the fiscal commission called for reducing the deficit to 2.3 percent of
The Democratic co-chairman of the fiscal commission Erskine Bowles actually had a harsher verdict on the budget than the Republican co-chairman Alan Simpson.
The budget proposal is “nowhere near where they will have to go to resolve our fiscal nightmare,” Bowles, former White House chief of staff for President Bill Clinton, told The Washington Post.
Simpson believed at least both parties are heading in the right direction because of the commission’s work that will make it more difficult to submit big spending deficits.
“It doesn’t bother me a bit,” Simpson told The Wall Street Journal. “We’ve thrown a stink bomb in the rose garden. It ain’t going away.”
Other fiscal experts and organizations were critical of the budget.
The budget contains $1.5 trillion in tax hikes, according to the taxpayer watchdog group Americans for Tax Reform, including raising the top marginal tax rates from 35 percent to 39.6 percent for individuals earning $200,000 or more and households earning $250,000 or more. The budget would also hike the death tax rate from 35 percent to 45 percent.
This is only a starting point, said Michael A. Peterson, vice chairman of the Peter G. Peterson Foundation, a fiscal responsibility advocacy group notable for their “Hugh Jidette for President” TV ads, featuring a parody of a politician whose name sounded like huge debt, with slogans like “borrow like there’s no tomorrow.”
“Both parties need to go much further,” Peterson said in a statement. “The real threat to America’s long-term economic future is not short-term discretionary spending, but the long-term structural deficits that result in massive interest costs that would burden our nation for decades. To address our long-term fiscal and economic challenges effectively, we need a bipartisan plan that fully tackles all of the major unsustainable areas of the federal budget.
“Despite the political challenges of reaching bipartisan solutions, the President’s Fiscal Commission is proof that this can be done,” Peterson continued. “It is time for lawmakers from both parties to show leadership by putting our country on a path to economic prosperity and fiscal sustainability.”