Obama Releases $3.7 Trillion Budget For 2012

President Obama has unveiled a budget plan that aims to cut the deficit by more than $1 trillion over the next decade. But that would still leave $1 trillion deficit for fiscal year 2012.

MICHELE NORRIS, Host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, Host:

And I'm Melissa Block.

Today, President Obama unveiled his budget for the next year. And in his own words, you can glimpse the country's fiscal challenge. He said it is essential to live within our means and yet, he added, we can't sacrifice our future in the process. With that, the president kicked off what is likely to be a months- long battle over how much to spend, how much to cut, and how much deficit is too much.

NPR's Mara Liasson starts off our coverage.

MARA LIASSON: The president traveled to a middle school in Baltimore to highlight his commitment to education, and to fire the first shot in this year's battle over the size and scope of the federal government.

Even as it increased spending on things like education and research, Mr. Obama said his budget would cut $400 billion from domestic, non-defense spending by freezing the budget at current levels for five years. And that, the president said, would bring domestic spending down to a 50-year low as a share of GDP.

P: Let me repeat that. Because of our budget, this share of spending will be at its lowest level since Dwight Eisenhower was president. That level of spending is lower than it was under the last three administrations. And it will be lower than it was under Ronald Reagan.

LIASSON: Mr. Obama said his budget did that by cutting that hearty perennial waste, fraud and abuse, but also by making deep painful cuts in important programs.

P: It will mean cutting things that I care deeply about - for example, community action programs in low-income neighborhoods and towns, and Community Development Block Grants that so many of our cities and states rely on. But if we're going to walk the walk when it comes to fiscal discipline, these kinds of cuts will be necessary.

LIASSON: Republicans on Capitol Hill say the president's cuts don't go far enough. On community development grants, for instance, the White House wants to cut 300 million next year; House Republicans plan to cut them by $3 billion this year. Still, there is something both sides have in common: They're each confining their cuts to a small slice of the budget - the 15 percent or so that's appropriated each year for domestic spending outside of national security.

NORRIS: the entitlement programs that account for 60 percent of all federal spending. And that's something the president readily admits.

P: As the bipartisan fiscal commission concluded, the only way to truly tackle our deficit is to cut excessive spending wherever we find it - in domestic spending, defense spending, health-care spending and spending through tax breaks and loopholes. So what we've done here is make a down payment.

LIASSON: But not much of one. The non-partisan Congressional Budget Office projected that with no change in federal policy, the deficit in 2016 would be $659 billion. With the president's proposals, the deficit in 2016 would be about $649 billion.

Mr. Obama has been criticized for not initiating bipartisan negotiations that would tackle entitlement spending and tax breaks. But today, the president's budget director, Jack Lew, said the White House is waiting for the right moment to engage with the Republicans.

NORRIS: Every side begins with its deeply held views. We have our deeply held views; they have their deeply held views. I think it's also true that you - looking ahead, have a hard time predicting where the moments of coming together are.

Last November, no one was predicting that the Congress and the president would come together and do something both important and historic in passing the tax bill that we passed last December.

LIASSON: But those lame-duck negotiations were not a model for doing anything hard, like tackling popular programs such as tax breaks or Medicare. That December deal that Lew refers to was easy, by Washington standards. Both sides came together to cut taxes and increase the deficit.

Bob Greenstein is the director of the Center on Budget and Policy Priorities, and he thinks the White House is right to wait.

NORRIS: My impression is that the president would like, at some point, to summon the leaders and have a bipartisan negotiation. You don't do that if the groundwork hasn't been laid, and the odds are that the whole thing will fail. Not only does that hurt the president politically but frankly, it sets back deficit reduction.

LIASSON: And right now, with House Republicans digging in to demand deep, immediate cuts for the remainder of this year, the two sides have difficult negotiations ahead to avoid a government shutdown that could come as early as March 5th.

Mara Liasson, NPR News, the White House.

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