Obama Budget Calls For $4 Trillion Deficit Reduction
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As President Obama released his budget today, one message was clear. With the economy still fragile, this is not the time for austerity. The president's $3.8 trillion plan calls for new government spending. It would be paid for, in part, with higher taxes on the wealthy. And you might not be surprised to hear, it landed with a thud on the doorstep on congressional Republicans.
But as NPR's Scott Horsley reports, the White House hopes that voters will look upon the budget more favorably.
SCOTT HORSLEY, BYLINE: The president's budget brings an accountant-sharpened pencil to the broad felt-tip plans in his State of the Union message. Mr. Obama unveiled the plan this morning at a community college in Northern Virginia.
PRESIDENT BARACK OBAMA: Don't worry, I will not read it to you.
(SOUNDBITE OF LAUGHTER)
OBAMA: It's long and a lot of numbers.
HORSLEY: Those numbers don't necessarily add up. The $1.3-trillion deficit Mr. Obama's projecting for the current fiscal year is bigger than last year's. For now, the White House is putting deficit reduction on the back burner while doubling down on efforts to encourage job growth.
OBAMA: The main idea in the budget is this, at a time when our economy is growing and creating jobs at a faster clip, we've got to do everything in our power to keep this recovery on track.
HORSLEY: Mr. Obama recycles many of the proposals from the jobs bill he proposed in September and he calls for hundreds of billions of dollars in additional spending on highway and railroad projects. Mr. Obama drew a sharp contrast between his strategy and Republican calls for deeper cuts.
OBAMA: We can't just cut our way into growth. We can cut back on the things that we don't need, but we also have to make sure that everyone is paying their fair share for the things that we do need.
HORSLEY: Mr. Obama's budget calls for one and a half trillion dollars in new tax revenues over the next decade. That includes expiration of the Bush-era tax cuts for the wealthy and a limit on their tax deductions. The president's plan would also tax dividends paid to wealthy families at the same higher rate as ordinary income. Congressional Republicans aren't likely to go along with any of those tax proposals.
Ohio Senator Rob Portman, who served as George W. Bush's budget director, complains that Mr. Obama's plan doesn't begin to tackle the yawning deficit.
SENATOR ROB PORTMAN: To me, this budget goes beyond the line. It goes beyond just being a political document. It goes to being an irresponsible document given what we're facing in terms of the fiscal problems, given what our kids and grandkids will be facing thanks to our irresponsibility, and given the impact on the economy.
HORSLEY: The president's plan does include modest cuts to health care spending and farm subsidies, and cuts nearly half a trillion dollars from the Pentagon's budget. Under the plan, deficits would shrink to a sustainable level by 2018, but Maya MacGuineas, who heads the Committee for a Responsible Federal Budget, says the plan doesn't do enough to address the long-term costs of Medicare and Social Security.
MAYA MACGUINEAS: It's kind of inexcusable for politicians of either party to take the year off because it's an election year. We know we have these fiscal challenges, and the president has laid out something that is credible as a start of the discussion, but it doesn't get us nearly far enough.
HORSLEY: MacGuineas also complains that Mr. Obama has resorted to the same kind of accounting gimmicks he used to criticize. For example, his budget suggests a $476 billion public works program could be financed in part with money that's, quote-unquote, "saved" by winding down wars in Iraq and Afghanistan.
MACGUINEAS: Well, guess what? There's no real savings there, because we never paid for those wars. This is funny money. And pretending that you can use the drawdown of the war to pay for other real spending priorities just digs the deficit hole deeper.
HORSLEY: Congressional Republicans will put out their own budget proposal in the coming weeks. And while neither will serve as a blueprint for actual government spending, they will lay the groundwork for a spirited political debate.
Scott Horsley, NPR News, the White House.
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