February 15, 2011: President Obama Unveils Massive $3.7 Trillion 2012 Budget, Republicans Vow Cuts

POLITICAL HIGHLIGHTS

By Bonnie K. Goodman

Ms. Goodman is the Editor of History Musings. She has a BA in History & Art History & a Masters in Library and Information Studies from McGill University, and has done graduate work in history at Concordia University.

OBAMA PRESIDENCY & THE 112TH CONGRESS:

Drew Angerer/The New York Times

President Obama spoke about the budget and education at Parkville Middle School and Center of Technology in Baltimore on Monday. He was flanked by Secretary of Education Arne Duncan at left and Jack Lew, director of the Office of Management and Budget, at right.

STATS & POLLS

THE HEADLINES….

  • Obama’s Budget Focuses on Path to Rein in Deficit: With President Obama’s release on Monday of a budget for next year and House action this week on a Republican plan for immediate deep spending cuts, the nation is getting its clearest view since the president took office of the parties’ competing visions of the role of government, the urgency of addressing the deficit and the best path to long-term economic success.
    Mr. Obama used his budget for the fiscal year 2012 and beyond to make the case for selectively cutting spending while increasing resources in areas like education and clean energy initiatives that hold the potential for long-term payoffs in economic growth. With this year’s deficit projected to hit a record, $1.6 trillion, he laid out a path for bringing down annual deficits to more sustainable levels over the rest of the decade…. – NYT, 2-15-11
  • Obama budget: Some cuts, not the slashes GOP asks: Putting on the brakes after two years of big spending increases, President Barack Obama unveiled a $3.7 trillion budget plan Monday that would freeze or reduce some safety-net programs for the nation’s poor but turn aside Republican demands for more drastic cuts to shrink the government to where it was before he took office….. – AP, 2-15-11
  • Highlights of Obama’s 2012 spending plan: Obama sends plan to Capitol Hill; goal is to get funding in place by start of 2012 fiscal year… Plan includes a significant increase in education funding… Plan decreases discretionary resources for the Department of Transportation…. It trims funding for African Development and Inter-American Foundations by nearly 20%
    President Obama’s spending plan is just the first step in a process that will involve no less than 40 congressional committees, 24 subcommittees, countless hearings and a number of floor votes in the House and Senate, with the aim of getting funding in place for the federal government by the beginning of the 2012 fiscal year October 1.
    Congress never passed a budget for the current fiscal year, and the government has been running on a “continuing resolution,” which expires March 4. House Republicans have thrown down the gauntlet over cuts to current programs and threaten to shut down the government if they don’t get their way.
    After Obama sends his 2012 plan to Capitol Hill, House and Senate budget committees each pass their own budget resolutions, which set caps on spending and establish revenue targets and generally serve as five- to 10-year blueprints for congressional priorities…. – CNN,
  • Obama budget resurrects rejected tax increases: President Barack Obama’s budget proposal resurrects a series of tax increases on certain corporations and the wealthy that were largely ignored by Congress when Democrats controlled both chambers. Republicans, who now control the House, are signaling they will be even less receptive.
    The plan unveiled Monday includes tax increases for oil, gas and coal producers, investment managers and U.S.-based multinational corporations. The plan would allow Bush-era tax cuts to expire at the end of 2012 for individuals making more than $200,000 and married couples making more than $250,000. Wealthy taxpayers would have their itemized deductions limited starting in 2012, including deductions for mortgage interest, charitable contributions and state and local taxes…. – AP, 2-14-11
  • Showtime for House Republican spending cuts: One day after President Barack Obama presented Congress with his $3.7 trillion budget, the focus shifts on Tuesday to Washington’s more immediate spending needs and a controversial spending-cut bill that Republicans hope to pass in the House of Representatives.
    The House legislation, cobbled together by Republicans after weeks of intraparty fighting, would cut about $61 billion from current spending in a bill to fund government activities through the rest of this fiscal year that ends on September 30.
    The spending being proposed would be equal to a 14 percent cut from last year…. – Reuters, 2-15-10
  • House Republicans counter Obama budget plan with much deeper cuts: On Monday, President Obama made his statement about how the government ought to change its spending habits: a gradual plan that minimizes immediate pain by phasing in cuts over a decade.
    Starting Tuesday, House Republicans will move forward with a very different approach, one intended to be viewed as radical and painful. Their proposal deals not with theoretical deficit targets set far in the future but with the final seven months of this year’s budget, a period left in flux by congressional inaction.
    House Republicans want to cut $61 billion from the budget, which would amount to the most significant government contraction since the end of World War II. Decried as “dire” and “disturbing” by Democrats, the plan has become a test for how far Republicans are willing to go in order to deliver on the promise of fiscal austerity that GOP candidates pledged to voters last year.
    “It’s big, and it’s real and it can impact people’s lives,” House Majority Leader Eric Cantor (R-Va.) said Monday of the House legislation. “But we have a budget deficit right now of nearly $1.5 trillion. We have a lot of work to do.”… – WaPo, 2-15-11
  • Obama budget: $3.7 trillion FY ‘12 blueprint calls for key ‘investments’; red ink surges: Trying to balance the need to rein in deficits with his belief that spending now on education and other priorities will pay off in the long term, President Obama on Monday sent Congress a $3.7 trillion budget blueprint for 2012 that makes some short-term fixes but puts off heavy lifting on Social Security and Medicare.
    The budget acts as an update on the current fiscal year, as well as a plan for the future, and it shows the federal government will run a record $1.645 trillion deficit in 2011, slimming down to $1.101 trillion in 2012 and continuing the red ink for the foreseeable future, though at lower levels.
    After massive spending during his first two years in office, Mr. Obama proposed some tax increases and strategic spending cuts for 2012, such as in low-income energy assistance and student aid. But he also called for boosting spending on transportation and education – needs the president said cannot be sacrificed even in the face of the deficit…. – Washington Times, 2-14-11
  • Obama budget sets up spending fight Proposed cuts too small for GOP’s fiscal hawks: President Barack Obama sent Congress a $3.73 trillion 2012 budget that would boost spending in Michigan on items like education and energy, while cutting things like heating assistance for the poor and Great Lakes cleanup in an effort to bring the federal deficit under control. White House officials said Obama’s budget proposal for the fiscal year that begins in October would trim the federal deficit by $1.1 trillion over a decade, and produce about a $1.6 trillion budget hole for this year. The plan now goes to Congress, where it’s likely to encounter stiff opposition from Republicans who have said they want deeper cuts and lawmakers on both sides of the aisle who will fight for programs and tax breaks benefiting their districts… – The Detroit News, 2-15-11
  • Editorial: The Obama Budget: On paper, President Obama’s new $3.7 trillion budget is encouraging. It makes a number of tough choices to cut the deficit by a projected $1.1 trillion over 10 years, which is enough to prevent an uncontrolled explosion of debt in the next decade and, as a result, reduce the risk of a fiscal crisis.
    The questions are whether its tough choices are also wise choices and whether it stands a chance in a Congress in which Republicans, who now dominate the House, are obsessed with making indiscriminate short-term cuts in programs they never liked anyway. The Republican cuts would eviscerate vital government functions while not having any lasting impact on the deficit.
    What Mr. Obama’s budget is most definitely not is a blueprint for dealing with the real long-term problems that feed the budget deficit: rising health care costs, an aging population and a refusal by lawmakers to face the inescapable need to raise taxes at some point. Rather, it defers those critical issues, in hopes, we assume, that both the economy and the political environment will improve in the future…. – NYT, 2-15-11
  • President Obama’s budget kicks the hard choices further down the road: THE PRESIDENT PUNTED. Having been given the chance, the cover and the push by the fiscal commission he created to take bold steps to raise revenue and curb entitlement spending, President Obama, in his fiscal 2012 budget proposal, chose instead to duck. To duck, and to mask some of the ducking with the sort of budgetary gimmicks he once derided. “The fiscal realities we face require hard choices,” the president said in his budget message. “A decade of deficits, compounded by the effects of the recession and the steps we had to take to break it, as well as the chronic failure to confront difficult decisions, has put us on an unsustainable course.” His budget would keep the country on that course…. – WaPo, 2-15-11

QUOTES

  • The President Unveils a Budget to Win the Future for Our Kids: And I just came to Parkville on a day where we are unveiling our budget, and I’m doing so for a reason. But before I do that I just want to thank Principal Buddy Parker, who is showing us around, as well as Susan Yoder, the eighth grade science teacher who we just visited with in her classroom.
    Over the last few weeks I’ve traveled the country, talking about what we need to do to win the future; talked about the need to invest in innovation, so that the next big idea is discovered here in the United States of America. I’ve talked about the need to invest in high-speed rail and high-speed Internet, so that companies can move goods and information faster than ever. And this week, I’ll be talking about the need to invest in education -– in places like Parkville -– so that every American is equipped to compete with any worker, anywhere in the world.
    These investments are an essential part of the budget my administration is sending to Congress. Because I’m convinced that if we out-build and out-innovate and out-educate, as well as out-hustle the rest of the world, the jobs and industries of our time will take root here in the United States. Our people will prosper and our country will succeed.
    But I’m also convinced that the only way we can make these investments in our future is if our government starts living within its means, if we start taking responsibility for our deficits. That’s why, when I was sworn in as President, I pledged to cut the deficit in half by the end of my first term. The budget I’m proposing today meets that pledge -– and puts us on a path to pay for what we spend by the middle of the decade. We do this in part by eliminating waste and cutting whatever spending we can do without.
    As I start — as a start, I’ve called for a freeze on annual domestic spending over the next five years. This freeze would cut the deficit by more than $400 billion over the next decade, bringing this kind of spending — domestic discretionary spending — to its lowest share of our economy since Dwight Eisenhower was President. 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.
    Now, some of the savings will come through less waste and more efficiency. To take just one example, by getting rid of 14,000 office buildings, lots and government-owned properties we no longer need, we can save taxpayers billions of dollars. And when it comes to programs we do need, we’re making them work better by demanding accountability. Instead of spending first, and asking questions later, we’re rewarding folks inside and outside government who deliver results. And to make sure that special interests aren’t larding up legislation with pet projects, I’ve pledged to veto any bill that contains earmarks.
    Still, even as we cut waste and inefficiency, this budget freeze will require some tough choices. 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…. – WH, 2-14-11TranscriptMp4Mp3
  • Jack Lew: The 2012 Budget: Today, the President sent to Congress his budget for the 2012 fiscal year. This document is built around the simple idea that we have to live within our means so we can invest in the future. Only by making tough choices to both cut spending and deficits and invest in what we need to win the future can we out-educate, out-build, and out-innovate the rest of the world.
    This is the seventh Budget that I have worked on at OMB, and it may be the most difficult. It includes more than $1 trillion in deficit reduction – two-thirds from spending cuts — and puts the nation on a path toward fiscal sustainability so that by the middle of the decade, the government will no longer be adding to our national debt as a share of the economy and will be paying for what it spends – and will be able to sustain that for many years afterwards.
    The President has called this budget a down payment because we will still have work to do to pay down the debt and address our long-term challenges. But it is a necessary and critical step for we cannot start to move toward balance and to cutting into the size of our debt until we first stop adding to it – and that is what this Budget does…. – WH, 2-14-11
  • Barack Obama: “The fiscal realities we face require hard choices. A decade of deficits, compounded by the effects of the recession and the steps we had to take to break it, as well as the chronic failure to confront difficult decisions, has put us on an unsustainable course.”
  • Barack Obama: “As we move to rein in our deficits, we must do so in a way that does not cut back on those investments that have the biggest impact on our economic growth, because the best antidote to a growing deficit is a growing economy. So even as we pursue cuts and savings in the months ahead, we must fund those investments that will help America win the race for the jobs and industries of the future – investments in education, innovation, and infrastructure.”
  • Eric Cantor: This week, the House will consider H.R. 1 – historic legislation that will reduce spending by at least $100 billion over the next seven months. This is the largest spending cut in modern history. These are not easy cuts, but we are finally doing what every American has to do both at home and at work – begin a path towards living within our means.
  • John Boehner: President Obama’s latest budget will destroy jobs by spending too much, borrowing too much, & taxing too much. The American people have made it clear they want Washington’s job-crushing spending binge to end. To help our economy get back to creating jobs, we need to liberate it from the shackles of Big Government and out-of-control spending. H.R. 1, on the House floor this week, will help do this.
  • Mitch McConnell: Senator McConnell comments on the President’s Budget: After two years of failed Stimulus programs and Democrats in Washington competing to outspend each other, we just can’t afford to do all the things the administration wants to do. The President has said he wants us to ‘Win the Future.’ But this budget abdicates the future. It simply spends too much, taxes too much, and borrows too much.
  • Sarah Palin: The Truth Behind the White House’s Budget Spin: Today the White House finally produced its proposal for the 2012 budget. Beware of the left’s attempt to sell this as “getting tough on the deficit,” because as an analysis from Americans for Tax Reform shows, the White House’s plans are more about raising taxes and growing more government than reducing budget shortfalls.
    The fine print reveals a White House proposal to increase taxes by at least $1.5 trillion over the next decade. If you want to know how minuscule their proposed $775 million-a-year budget “cuts” really are, please look at this chart. The proposed cuts are so insignificant – less than 1/10 of 1% of this year’s $1.65 trillion budget deficit – that they are essentially invisible on the pie chart. That speaks volumes about today’s budget.
    UPDATE: As J.D. Foster of the Heritage Foundation points out: “…the President proposes a budget that keeps the federal government on a thoroughly irresponsible and unsustainable course.” Please read the Heritage Foundation article and understand the $775 million in proposed cuts noted above are what the White House’s budget director Jacob Lew identified as reflecting what they perceive as some “tough calls.” Yet, as noted, they are a drop in the bucket; and the White House’s total proposed cuts for this year are still not at all enough to make us solvent.

HISTORIANS & ANALYSTS’ COMMENTS

  • What the Budget Cuts Say About Obama: President Obama’s proposed budget would cut the deficit by $1.1 trillion in 10 years, with about two-thirds coming from spending cuts and one-third from added revenue. The House Republicans have called for much broader cuts of $2.5 trillion in 10 years.
    Both plans are primarily political statements, since neither is likely to be carried out without significant compromise. While the G.O.P. has long promoted itself as the party of fiscal conservatism, neither it nor the president makes cuts to costly entitlements like Medicare and Social Security.
    How is Mr. Obama positioning himself in the battle to define his party as fiscally responsible? His plan cuts programs that liberals support, like Pell grants, home-heating aid and environmental spending. What do these cuts say about his political strategy or approach?… -
  • Tevi Troy Senior Fellow, the Hudson Institute; Former Deputy HHS secretary Obama’s budget a deficit enabler?: It boggles the mind that the Obama administration would put forward a budget with a trillion dollar deficit that does not address the long-term fiscal morass facing our entitlement programs. Blaming the Republicans for not coming forward with more specific cuts first will not fly; in the strange Kabuki dance of the budget process, it is incumbent on the administration to release its own budget first. Republicans will have their own chance, in the form of the forthcoming battle over the annual Congressional Budget Resolution, to show where they stand on the issue. – Politico, 2-14-11
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