When President Obama rolls out his 2012 budget Monday, it will sound the starting gun on a three-month sprint that will determine just how serious Washington is about translating its cost-cutting rhetoric into serious action to reduce staggering deficits.
Mr. Obama’s budget marks the beginning of the 2012 budget fight, but it also sets the tone for how Congress tackles the debt ceiling, likely in April. With the federal government still operating on stopgap spending, Congress and the White House still have to hash out the 2011 spending bills that are more than four months overdue.
At stake is nothing less than the fiscal health of the country.
“The next few months are absolutely critical,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget. “The process of putting the budget pack on track will either begin in earnest, or politicians will collectively bury their heads in the sand and continue their partisan bickering, pushing off the moment of change to beyond the next election cycle and potentially risking that a fiscal crisis hits us before we make changes on our own terms.”
Mr. Obama’s budget will propose cutting some domestic programs and trying to lower the long-term deficit but will fall short of the spending cuts proposed by Republicans.
News reports say the president’s plan also will recommend ending Bush-era tax cuts for the highest earners when they expire at the end of 2012, but will leave untouched popular entitlement programs that drive federal spending more than any other part of the budget.
House Republicans on Friday unveiled their own bill to finish 2011 spending. The proposed measure would cut $58 billion from 2010 spending - some of the biggest one-year reductions in history.
Among their cuts, they zero out dozens of government offices, reduce spending on the Environmental Protection Agency, eliminate earmarks and cut funding for public broadcasting.
“We’re broke. What’s really dangerous is if we continue to do nothing and allow the status quo to stay in place,” Speaker John A. Boehner, Ohio Republican, said on NBC’s “Meet the Press” on Sunday. “When are we going to get serious about cutting spending?”
Democrats responded by warning that when “you try to make cuts this deep to a slice of the budget this narrow, it is almost impossible to do responsibly.”
“They want to use a meat ax instead of a smart, sharp scalpel,” said Sen. Charles E. Schumer, New York Democrat.
Whatever the case, with Republicans running the House and Democrats running the Senate, it has become clear that Congress will have a tough time bridging the philosophical divide over spending and deciding which of their competing parochial interests should be put on the chopping block.
A bipartisan group of lawmakers launched a pre-emptive strike last week in response to news reports that indicated Mr. Obama intends to cut $2.5 billion from the Low Income Home Energy Assistance Programs (LIHEAP), a federal block grant program that provides states with annual funding to operate home energy assistance programs for seniors and low-income households.
Sens. Jack Reed, Rhode Island Democrat, Olympia J. Snowe, Maine Republican, and 29 of their colleagues sent a letter to Jacob J. Lew, director of the Office of Management and Budget, asking him to reconsider “this decision in light of the economic hardships facing low-income families and seniors.”
“The consequences of this proposal will disproportionately affect New Englanders, who are already facing a 25 percent increase in home heating oil this year,” Mrs. Snowe said in a statement.
“The LIHEAP program is a necessity, not a luxury, and the president must fully account for the devastating social impact significant cuts would have on families in Maine and throughout the Northeast as they struggle to weather the current economic storm.”
The pressure to cut spending has mushroomed over the past year by voters who expressed opposition to runaway federal spending and by the president’s deficit reduction commission.
The high-profile commission released a report in December that highlighted how federal spending now makes up the largest part of the economy since World War II and that tax revenues are at their lowest levels since 1950.
The 2011 spending bills address discretionary spending, but the real cost increases are in entitlements such as Social Security, Medicare and Medicaid, which could be dealt with in the 2012 budget.
In his weekly radio address Saturday, Mr. Obama repeated his vow to offer a budget proposal that includes a five-year freeze onnonsecurity discretionary spending and calls for “job-creating investments in roads, high-speed trains and broadband.”
“So after a decade of rising deficits, this budget asks Washington to live within its means, while at the same time investing in our future,” the Democrat said. “It cuts what we can’t afford to pay for what we cannot do without.”
In the Republican response, Sen. Orrin G. Hatch of Utah said “the president’s proposal for a freeze in government spending might give the White House a nice talking point, but it is a totally inadequate solution to our nation’s spending problems.”
Budget analysts said both sides will have to think bigger if they want to make a real dent in the deficit.
Robert L. Bixby, executive director of the Concord Coalition, called the president’s proposed freeze “more window-dressing” and said the GOP spending cuts “focus far too much attention on a narrow slice of the budget.”
The long-term spending problems will not be addressed until lawmakers stop paying just lip service to the entitlement programs that make up the largest and fastest growing part of the federal budget, he said.
“I think both sides are trying to avoid a fight over the things that’s going to offend their base,” Mr. Bixby said.
“If they fight about waste, fraud, and abuse and domestic discretionary programs - that’s safe territory. Republicans don’t have to alarm anybody about putting taxes on the table and Democrats don’t have to alarm anybody about putting entitlements on the table.”