WASHINGTON – President Barack Obama on Monday sent Congress a federal budget for the coming fiscal year that projects a near-record $1.27 trillion deficit, saying he would create a bipartisan commission to find ways to bring down government spending.
“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, as if we can ignore this challenge for another generation. We can’t,” Obama said.
But despite the president’s call for a new commitment to stemming the tide of red ink, the immensity of the challenge was immediately clear.
Republicans denounced the $3.8 trillion spending blueprint for the fiscal year beginning Oct. 1. They dismissed the deficit reduction panel as a political ploy, saying they would not participate.
“We’ve already discussed it with many members of our caucus and there’s no enthusiasm at all for this kind of commission – precisely because it’s a cover for their desire to significantly increase taxes,” said Rep. Tom Price, R-Ga., chairman of the House Republican Study Committee.
Beyond politics, actual federal spending is determined primarily by Congress, not the White House – regardless of the party in power. And the bulk of Obama’s budget – like those of his predecessor, George W. Bush – involves spending on programs that congressional Democrats and Republicans have both been reluctant to curb – Social Security, Medicare and defense.
Together, those three account for about 60 percent of the new Obama budget.
Reflecting that reality, Obama proposed a freeze on the overall level of discretionary spending, though not on national security functions or entitlement programs such as Social Security, Medicare and Medicaid.
In other areas, both the president’s proposed spending increases and his calls for reductions or increased revenues are likely to spark controversy.
The budget contains a $100 billion jobs package that includes small business tax cuts and infrastructure and clean energy investments. It would raise public school funding by 6 percent and increase the Pell Grant for needy college students to almost double what it was when Obama took office.
The president proposed cutting NASA’s budget and turning away from its goal of returning men to the moon – proposals likely to spark resistance in Florida, a politically critical state.
Equally controversial was the call for saving $2.5 billion by cutting production of the C-17 cargo plane. The Pentagon has long maintained that it has enough of the planes, which are built in Southern California, but Congress has restored funding to keep the production line open and running anyway.
Republicans were quick to jump on Obama’s proposal to allow the Bush tax cuts for households making more than $250,000 a year to expire, which would generate $678 billion over 10 years.
“Just three days after talking to House Republicans about the importance of fiscal responsibility, President Obama is submitting another budget that spends too much, taxes too much, and borrows too much,” said House Republican leader John Boehner of Ohio.
At $3.8 trillion, the overall price tag reflects growth of 3 percent over current spending for the fiscal year ending Sept. 30.
In addition to the $1.27 trillion deficit projected for fiscal year 2011, the administration now projects the current-year deficit will hit a record $1.6 trillion, a figure that added to the long-term concern of deficit hawks and fueled GOP attacks on Democrats as reckless spenders.
In turning to a blue-ribbon deficit panel, Obama invoked a familiar Washington strategy for dealing with issues fraught with anxiety for politicians worried about re-election.
His goal is cutting deficits to no more than 3 percent of the economy, a level many economists consider sustainable, by the year 2015. The current year deficit, if it hits the new projection of $1.6 trillion, would be nearly 11 percent of the economy.
Last week, the Senate voted down a proposed deficit-cutting commission. So Obama is setting it up by executive fiat instead.
One proposal circulating on Capitol Hill would create an 18-person commission made up of both Republicans and Democrats. The House, Senate and Obama administration would each appoint six people to serve.
Vice President Joe Biden sent a letter to Sen. Kent Conrad, D-N.D., last week spelling out the timetable for action on the commission’s work. Biden wrote that he had reached an agreement with the House and Senate leadership to put the commission’s recommendations on the Senate calendar by January 2011 – before the end of the 111th Congress.
If the Senate passes the measure, the House would commit to voting on “whatever has passed the Senate” by that same deadline, according to Biden’s letter.
White House aides believe they can drive down the deficit to about 4 percent of the economy by 2015 through the combination of an improving economy, the partial spending freeze, taxes and new fees. But to hit that 3 percent deficit target, the Obama administration said it must put in place the independent, bipartisan commission.