Obama struggles to balance budget cuts, spending

[Auburn85 436]

http://news.yahoo.com/s/afp/20110213/ts_alt_afp/useconomypoliticsobamabudget

by Andrew Beatty Andrew Beatty

WASHINGTON (AFP) – US President Barack Obama unveils his fiscal 2012 budget Monday, an election year plan forged from conflicting needs to cut spending and stoke the economic recovery.

With vast crisis payments and sharply lower tax revenues making it difficult for the government to balance its books, Obama will set out an austerity plan that will help set the tone for next year's presidential race.

It is expected to address widespread public anger that the government is living beyond its means, detailing hundreds of billions of dollars of spending cuts, while making investments that will help "win the future."

White House budget chief Jack Lew said Sunday that the "responsible" proposal aims to slash the massive federal deficit by $1.1 trillion over 10 years and will cut the ballooning deficit in half by the end of Obama's first term in January 2013.

The proposed budget reductions are more than double the $400 billion of cuts in non-essential programs Obama unveiled in his State of the Union address last month as part of a five-year spending freeze. The president said those savings would take place over 10 years.

"The challenge we have is to live within our means but also invest in the future," Lew told CNN.

The budget is expected to cut $78 billion from the defense budget over five years, slash energy subsidies for the poor and freeze public workers' pay.

Lew has outlined a series of other targeted cuts, including $350 million from community service funding and $300 million from Community Development Block grants for housing assistance and infrastructure development.

And graduate student loans would also have to accrue interest while students are completing their studies, though the interest would not have to be paid until the person graduates.

But faced with high unemployment and an economic recovery that is still struggling to escape the orbit of the 2008 economic crisis, Obama will also give states more flexibility to pay for unemployment benefits.

He will also argue for an $18 billion plan to improve high speed Internet access, and $8 billion for high-speed railways in the fiscal year starting October 1.

At 2,448 pages and a weight of 10 pounds (4.5 kilograms) the budget will contain something for most members of Congress -- who have to approve it -- but plenty more that will be loathed.

Ahead of the budget's publication, Republicans have been outdoing themselves in the promotion of ever-deeper spending cuts and criticizing Obama for not doing enough.

Republicans argue spending cuts will help boost growth, while the Obama administration argues cuts are needed, but should be carefully measured for fear of derailing the recovery.

Bringing the two sides together is likely to be a long process that takes up most of the year before the required congressional approval of the budget.

"It looks like the debt's going to continue rising under this budget," House Budget Committee Chairman Paul Ryan told "Fox News Sunday" after Republicans promised $100 billion in cuts to popular programs for the remainder of the current fiscal year.

"Presidents are elected to lead, not to punt. And this president has been punting."

But experts say cuts in discretionary spending, like those proposed by Obama and the Republicans, are just a drop in the fiscal bucket.

"This spending accounted for just one-fifth of total outlays last fiscal year," said Augustine Faucher of Moody's Analytics.

"Even if it had been entirely eliminated -- wiping out the budgets for running the government, education, national parks and the like -- the fiscal 2010 deficit still would have topped $600 billion."

Fears are growing that the inability of the United States to get its budget under control could eventually lead to a debt crisis and a possible default that would plunge the globe into crisis.

This week, Federal Reserve chairman Ben Bernanke warned that dramatic change was inevitable to a "looming or actual fiscal crisis."

The US budget deficit is currently at the highest levels since World War II, and is projected to hit $1.48 trillion this year, or 9.8 percent of gross domestic product, according to the Congressional Budget Office.

[jj3jordan 2,157]

How do you even propose such a budget? I say we all do this with our personal budgets and the feds can bail us out.

[OldNewby 27]

Any headline that begins with Obama struggles is unbelievable.

[channonc 466]

Anyone (including the President and Republicans) that suggest we can solve the deficit crisis by only looking at 15% of the budget is not willing to have a serious conversation about cutting the deficit.

[RunInRed 18,089]

Anyone (including the President and Republicans) that suggest we can solve the deficit crisis by only looking at 15% of the budget is not willing to have a serious conversation about cutting the deficit.

Exactly.

I was listening to right wing talk radio on the drive in this morning and they had a spokesman from the Heritage Foundation yapping about Obama's budget, spending, the deficit, etc. The host (to his credit) then asks: "So, then is the Heritage Foundation on board with reducing Defense spending since it makes up a big chunk of the overall pie." Answer: "No."

[jj3jordan 2,157]

Anyone (including the President and Republicans) that suggest we can solve the deficit crisis by only looking at 15% of the budget is not willing to have a serious conversation about cutting the deficit.

Exactly.

I was listening to right wing talk radio on the drive in this morning and they had a spokesman from the Heritage Foundation yapping about Obama's budget, spending, the deficit, etc. The host (to his credit) then asks: "So, then is the Heritage Foundation on board with reducing Defense spending since it makes up a big chunk of the overall pie." Answer: "No."

There is waste in the defense budget, but it is only 24% of the overall. All sections should be on the table. No debt ceiling increase. Balance the budget with NO deficit.

[AFTiger 282]

Defense has been cut steadily over the years. While we face Islamic terror now, we are totally unprepared for an ever expanding and hostile China.

In 1970, Defense was 42% of the budget, while Medicare, Medicaid, and Social Security was 20%. Interest on the debt was 7%.

In 2010, Defense was 20% of the budget, while Medicare, Medicaid, and Social Security was 40%. Interest on the debt was 6%.

In 2040 projections, Defense will be 11% of the budget, while Medicare, Medicaid, and Social Security will be 52%. Interest on the debt will be 30%.

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