Obama Walks A Line With Budget Priorities, Deficit

President Obama sent his proposed $3.8 trillion budget for fiscal year 2011 to Congress Monday. But he has conflicting goals of gaining control of runaway budget deficits and pumping money into the sputtering economy. And Obama has to sell his plan to Congress in an election year.

Copyright © 2010 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, host:

And I'm Melissa Block.

At the White House today, President Obama released his proposed budget for the coming year. It has two conflicting goals: Get control of runaway deficits, and keep pumping money into the sputtering economy.

As NPR's Andrea Seabrook reports, it's a difficult trick to pull off, especially since the president has to sell his plan to Congress in an election year.

ANDREA SEABROOK: First, a few basic facts. The president's proposal totals $3.8 trillion. That's everything from disability checks to highway paving to the wars. One point three trillion of that would go on a credit card; that's the deficit. The largest portions of the budget pie go to Social Security, Medicare and Medicaid. Those programs get automatic funding increases that take a separate act of Congress to trim down.

The rest of the money is split under the president's budget into two categories: security spending and non-security spending. Under security spending comes the Department of Defense, Homeland Security and Veterans Affairs. Together, their funding grows by 5.2 percent over last year.

The non-security spending category is, well, everything else - from public schools to hospitals to energy programs. Their budgets are reduced by 1.1 percent. And that's what President Obama is proposing to freeze for the coming three years.

President BARACK OBAMA: We simply cannot continue to spend as if deficits don't have consequences, as if waste doesn't matter, as if the hard-earned tax dollars of the American people can be treated like Monopoly money.

SEABROOK: The administration says it's trying to walk a tightrope with this budget, but it's already getting criticism from Congress.

Senator JUDD GREGG (Republican, New Hampshire): Well, they're not walking a tightrope at all. They're spending like drunken sailors.

SEABROOK: Senator Judd Gregg of New Hampshire, the top Republican on the Senate budget committee. He is not the least bit impressed with the partial spending freeze.

Sen. GREGG: It starts a year from now and represents a $10 billion savings on a $1.6 trillion deficit. It's just not going to cut it, it's small ball.

SEABROOK: Republicans would like to put real dents in the deficit by tackling the real problem, like Medicare and Medicaid. The administration said today that now is not the time to cut benefits for senior citizens and the poor, but that the health-care overhaul still before the House and Senate would start to address those problems. On the other side, Democrats in Congress don't much like this plan, either, because most of what's cut are social programs. House leaders made clear today that Congress will be looking for cuts in Defense and Homeland Security, too.

This budget makes quite a few changes in tax policy: lowering taxes here, raising them over there. In the lowering category, the budget extends last year's tax rebate for workers, and it proposes new tax credits for small businesses to hire new employees or raise wages. Other taxes will go up. The single biggest proposal that would raise government revenue in this plan is allowing income tax rates to go up to Clinton-era levels on households that make more than $250,000 a year. The administration also wants to charge a new fee to big banks that leaned on the government during the banking crisis.

White House Budget Director Peter Orszag said today that the president is trying to beat back deficits - but not too quickly. He doesn't want to repeat the mistakes of 1937, Orszag said.

Mr. PETER ORSZAG (White House Budget Director): Remember what happened then. When the economy was beginning to recover, the nation moved to consolidate the deficit too quickly, and you threw the economy back into recession.

SEABROOK: Then again, letting deficits pump up the national debt year by year would eventually choke off economic growth, Orszag said. Hence, the competing goals: Spend less, but not too much less, and not too quickly. President Obama said today that he welcomes new ideas from anyone in Congress.

Pres. OBAMA: What I will not welcome, what I reject, is the same old grandstanding when the cameras are on, and the same irresponsible budget policies when the cameras are off.

SEABROOK: But remember, when it comes to budgets, Congress holds most of the power and now, the ball is in its court.

Andrew Seabrook, NPR News, the Capitol.

Copyright © 2010 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.