Obama's Plan: Deficits Now, Budget Discipline Later The federal deficit will hit record heights this coming year, in part because the Obama administration wants to spend another $100 billion on immediate tax cuts and government spending to spur job growth. But even when the economy is on stronger footing, freezing discretionary spending doesn't touch the bulk of federal spending — which is on Medicare and other entitlements, along with defense spending.
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Obama's Plan: Deficits Now, Budget Discipline Later

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Obama's Plan: Deficits Now, Budget Discipline Later

Obama's Plan: Deficits Now, Budget Discipline Later

Obama's Plan: Deficits Now, Budget Discipline Later

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The federal deficit will hit record heights this coming year, in part because the Obama administration wants to spend another $100 billion on immediate tax cuts and government spending to spur job growth. But even when the economy is on stronger footing, freezing discretionary spending doesn't touch the bulk of federal spending — which is on Medicare and other entitlements, along with defense spending.

RENEE MONTAGNE, Host:

As NPR's Scott Horsley reports, the deficit would begin to shrink next year, but only gradually.

SCOTT HORSLEY: One part of the president's budget message is aimed squarely at independent voters, who've grown increasingly concerned about government's spending. For them, Mr. Obama offered tough talk, saying the government has to set priorities the same way American families do.

BARACK OBAMA: We simply can not 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.

HORSLEY: Pres. Obama: We won't be able bring down this deficit overnight, given that the recovery is still taking hold and families across the country still need help.

HORSLEY: This mixed message that we need bigger deficits now and more budget discipline later reflects the delicate balance Mr. Obama's trying to strike, both economically and politically. Budget Director Peter Orszag says the president doesn't want to repeat the mistake that Franklin Roosevelt made in 1937, when a renewed push to balance the budget sent the economy into another tailspin.

PETER ORSZAG: We don't want to act too rapidly to bring down the deficit, because that would exacerbate the jobs deficit. And so we're trying to find this balanced approach in which we have a smooth glide path, and I think that's what reflected in this budget.

HORSLEY: The president's budget would shrink the deficit gradually, from more than 10 percent of the overall economy this year to about eight percent next year and five percent the year after that. Some of the savings would come from a three-year freeze on discretionary spending that's not tied to national defense. Within that category, though, Mr. Obama would spend more money in some areas, such as clean energy and education.

OBAMA: Just as it would be a terrible mistake to borrow against our children's future to pay our way today, it would be equally wrong to neglect their future by failing to invest in areas that will determine our economic success in this new century.

HORSLEY: But chief economist Diane Lim Rogers of the fiscal watchdog Concord Coalition, says by making that choice, the president can no longer blame that portion of the deficit on his predecessor.

DIANE LIM ROGERS: If President Obama did nothing, if Congress did nothing, all of the Bush tax cuts that were passed in 2001 and 2003 would expire at the end of this calendar year. And we would get our budget deficit back down to two-and-a-half to three percent of GDP within five years, which is what the president actually says as his goal.

HORSLEY: Scott Horsley, NPR News, the White House.

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