‘Hard choices’ budget sees $1.75 trillion deficit

UPDATED:

In broad strokes, President Obama’s first budget takes him well beyond his goal of immediate economic recovery to put his stamp on the entire operation of the federal government — from a new global warming cap-and-trade scheme to creating a new mandatory spending program to doubling U.S. foreign aid.

The budget calls for spending nearly $4 trillion this year, or more than a quarter of the nation’s economy. It also projects a $1.7 trillion deficit this year, which is more than three times the previous record, and a $1.1 trillion deficit in 2010.

In the brief document — his full, detailed budget will come in April — Mr. Obama lays out a host of new spending priorities, tax increases and new fees, but very few cuts.

The $2 trillion in “savings” over the next decade he promised Congress Tuesday comes more from tax and fee increases on high-income earners and greenhouse-gas emitting companies than from budget cuts.

Click here to see a PDF of document.

Seeking to get ahead of the flood of red ink, Mr. Obama, in brief remarks to reporters, went beyond the document’s details to promise a few more cuts. He said he would find savings of $20 billion from the agriculture cuts; $200 million from stopping coal mine recovery payments to mines that have already been cleaned up; tens of millions of dollars by stopping an “ineffective” mentoring program; and $50 billion in stopping “overpayments and tax loopholes.”

“We will, each and every one of us, have to compromise on certain things we care about,” he said in promising more cuts to come.

Coupled with requests for hundreds of billions of dollars to continue bailing out financial institutions and with the $787 billion stimulus spending bill he signed last week, Mr. Obama is already facing harsh criticism.

Republicans, while slamming Mr. Obama’s proposed tax increases on high-income earners, which would also affect some small businesses, blamed overspending on congressional Democrats, pointing to more than $1 trillion in spending Congress has either already passed or is poised to pass this year.

“We dont believe these are the kind of choices the president is talking about, however it appears Democrats on Capitol Hill either havent heard his message, or simply dont care,” said House Minority Whip Eric Cantor, Virginia Republican.

Among Mr. Obama’s new proposals are increasing Pell Grants for low-income students to go to college and making the program part of mandatory spending, which takes away some of Congress’ ability to control costs.

He laid out the broad outlines of a cap-and-trading scheme to control greenhouse gas emissions. Beginning in 2012, the plan would auction off pollution credits that companies could then trade with each other, making those companies who pollute the most pay the most.

The president also called for U.S. foreign assistance to double to $50 billion as part of an effort to “help bring stability to other parts of the globe and greater security for our nation.”

Mr. Obama assumes a slightly better economic scenario than economists, including better employment and higher gross domestic product this year and next.

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