WASHINGTON (AP) — President Barack Obama's proposed budget predicts the national deficit will crest at a record-breaking $1.6 trillion in the current fiscal year, then start to recede in 2011 to $1.3 trillion, a congressional official said Sunday.
Still, the administration's new budget to be released Monday says deficits over the next decade will average 4.5 percent of the size of the economy, a level which economists say is dangerously high if not addressed, said the congressional official. The official was not authorized to discuss the budget before its public release.
Details of the administration's budget headed for Congress include an additional $100 billion to attack painfully high unemployment. The proposed $3.8 trillion budget would provide billions more to pull the country out of the Great Recession while increasing taxes on the wealthy and imposing a spending freeze on many government programs.
White House spokesman Robert Gibbs said the administration believed "somewhere in the $100 billion range" would be the appropriate amount for a new jobs measure made up of a business tax credit to encourage hiring, increased infrastructure spending and money from the government's bailout fund to get banks to increase loans to struggling small businesses.
That price tag would be below a $174 billion bill passed by the House in December but higher than an $83 billion proposal that surfaced last week in the Senate.
Gibbs said it was important for Democrats and Republicans to put aside their differences to pass a bill that addresses jobs, the country's No. 1 concern. "I think that would be a powerful signal to send to the American people," Gibbs said in an appearance on CNN's "State of the Union."
Job creation was a key theme of the budget President Barack Obama was sending Congress on Monday, a document designed, as was the president's State of the Union address, to reframe his young presidency after a protracted battle over health care damaged his standing in public opinion polls and contributed to a series of Democratic election defeats.
Obama's $3.8 trillion spending plan for the 2011 budget year that begins Oct. 1 attempts to navigate between the opposing goals of pulling the country out of a deep recession and dealing with a budget deficit that soared to an all-time high of $1.42 trillion last year.
The Congressional Budget Office is forecasting that the deficit for the current budget year will be only slightly lower, $1.35 trillion, and the flood of red ink will remain massive for years to come, raising worries among voters and the foreign investors who buy much of the country's debt.
On the anti-recession front, congressional sources said Obama's new budget will propose extending the popular Making Work Pay middle-class tax breaks of $400 per individual and $800 per couple through 2011. They were due to expire after this year.
The budget will also propose $250 payments to Social Security recipients to bolster their finances in a year when they are not receiving the normal cost-of-living boost to their benefit checks because of low inflation. Obama will also seek a $25 billion increase in payments to help recession-battered states.
Obama's new budget will set off months of debate in the Democratically controlled Congress, especially in an election year in which Republicans are hoping to use attacks against government overspending to gain seats. Obama has argued that he inherited a deficit of more than $1 trillion and was forced to increase spending to stabilize the financial system and combat the worst recession since the 1930s.
Obama's new budget was expected to repeat many of the themes of his first budget. But in a bow to worries over the soaring deficits, the administration is proposing a three-year freeze on spending for a wide swath of domestic government agencies. Military, veterans, homeland security and big benefit programs such as Social Security and Medicare would not feel the pinch.
The freeze would affect $447 billion in spending and is designed to save $250 billion over a decade. However, it would not fall equally on all domestic agencies. Some would see budget cuts to free up spending for programs the administration wants to expand such as education and civilian research efforts.
NASA's mission to return astronauts to the moon would be grounded with the space agency instead getting an additional $5.9 billion over five years to encourage private companies to build, launch and operate their own spacecraft for the benefit of NASA and others. NASA would pay the private companies to carry U.S. astronauts.
Obama's budget repeats his recommendations for an overhaul of the nation's health care system, the fight that dominated his first year in office. It proposes to get billions of dollars in savings from the Medicare program and again seeks increased taxes on the wealthy by limiting the benefits they receive from various tax deductions. Both ideas have met strong resistance in Congress.
Gibbs insisted Sunday that the president's push for health care was "still inside the 5-yard line," but Senate Republican leader Mitch McConnell, also appearing on CNN, said the public was overwhelmingly against the bill and the administration should "put it on the shelf, go back and start over."
In addition to the freeze on discretionary nonsecurity spending, Obama is proposing to boost revenues by allowing the Bush administration tax cuts of 2001 and 2003 to expire at the end of this year for families making more than $250,000 annually. Tax relief for those less well-off would be extended.
The new Obama budget will also include a proposal to levy a fee on the country's biggest banks to raise an estimated $90 billion to recover losses from the government's $700 billion financial rescue fund. Those losses are expected to come not come from the bank bailouts but from the support extended to General Motors and Chrysler and insurance giant American International Group as well as help provided to homeowners struggling to avoid foreclosures.
Also on the deficit front, the president has endorsed a pay-as-you-go proposal that passed the Senate last week. It would require any new tax cuts or entitlement spending increases to be paid for, and he has promised to create a commission to recommend by year's end ways to trim the deficits. However, a legislatively mandated panel was rejected in a Senate vote last week. Republicans opposed establishing the panel because it might recommend tax increases to close the deficit.
Sunday, January 31, 2010
PAYGO...Big spenders want you to think they’re actually deficit hawks. They’re lauding themselves for passing PAYGO legislation in the U.S. House, with praise from President Obama. But this bill is more loophole than substance. And Congress retains the power to waive its flimsy requirements whenever it wishes.
PAYGO is about creating political cover, not about controlling spending. Supposedly, pay-as-you-go requires that extra spending in one area must be offset by reducing spending elsewhere, or raising taxes, or requiring the President to sequester funds before they are spent.
The Congressional Budget Office says the measure “would allow the Congress to enact legislation that would increase deficits by an amount in the vicinity of $3 trillion over the 2010–2019 period without triggering a sequestration.”
Washington Post columnist David Broder agrees that the loopholes are enormous. For example, he writes, “the 40 percent of the budget reflected in annual appropriations bills for ongoing or new government programs does not have to be paid for.”
The moderate-dominated Committee for a Responsible Budget outlines the exemptions and concludes, “By exempting such costly policies, this PAYGO legislation keeps us on an unsustainable fiscal path.”
The conservative House Republican Study Committee states, “The idea seems great on the surface, but the Democrat version of PAYGO is so riddled with loopholes and exemptions that it only continues the mockery of fiscal restraint this Congress has come to represent.”Most of the praise is coming from the lawmakers who wanted to give themselves political cover and now are patting themselves on the back. Rep. Allen Boyd (D-FL) called it, “a tremendous victory for the American people and for those of us who know that our federal government cannot afford to continue to live outside its means.”
The bill gives House members “an ability to put out a press release to make it look like they’re being fiscally responsible,” Paul Ryan, the top Republican on the House Budget Committee, told Reuters.The House approved the bill yesterday by 265-166. Will the Senate approve the bill? Very possibly, although Senate Budget Chairman Kent Conrad (D-ND) told reporters he agreed with Republicans that the PAYGO bill includes too many loopholes.
The Associated Press reported, “By itself, pay-go does nothing to address the government’s deficit woes. . . .The pay-go measure wouldn’t force lawmakers to find the courage to actually do anything to stanch the flow of red ink; it instead seeks to prevent lawmakers from making it even worse. . . . But even if pay-go has the force of law, it can be waived.”
In typical Washington-speak, the bill never labels the loopholes as “exemptions,” but instead calls them “current policy adjustments.” Analysts says these exemptions include Social Security payments, food stamps, Medicaid, most of Medicare, payments to federal retirees, the pay of the President and former Presidents, all discretionary (non-entitlement) spending, estate and gift taxes, the alternative minimum tax for individuals, the middle-income tax cuts of 2001 and 2003, anything designated as an “emergency”, children’s health, Pell Grants, all economic recovery programs, veterans’ benefits, and much more.In this case, the holes are bigger than the cheese.
The Stimulus Bill gave our money to who the Democrats wanted. It went towards the unions. It made government jobs and SEIU larger while doing almost nothing for the private sector. How does makeing unions like SEIU larger and the governement larger help this country? The Democrats have done nothing short of punishing the private sector. They have called the private sector greedy when the government jobs make almost 75% more then the private sector. They have given we the people more of a burden to bare with added governement programes and governemnet employees. And when the Tea Party protesters demanded their conservative voice be heard SEIU member came out in force as a civil army to shut them up with FORCE. As most of the UAW workers at Ford can see. It is a good thing when the privet company you work for does well. For years the UAW has made the companies that support them, the enemy. Many within the ranks and file in the UAW have spent a lifetime demonizing Ford Motor Company. But now that GM and Chrysler aren't doing so well. Even with our huge loans to them. How will the Democrats react when the Republicans bring ballance to our economy? Will they say that they are anti union? Most likely. But hopefully the Republicans can stand tall and do what it takes to save our nation. We need to root out these Progressives within the ranks or our government. They are in both parties. And we must put the light on them and their true intentions. Many within the Progressive movement are trying to point out that I takes two wrongs to make a right. We need to just make thing right again.