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Obama's US$3.8 trillion budget heading to Congress
Source: Agencies |
February 1, 2010, Monday
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JOB creation will be a key theme of the budget President Barack Obama sends to Congress today, reflecting his effort to reframe his young presidency after a bruising battle over health care damaged his standing in public opinion polls and contributed to a series of Democratic election defeats.
Obama's US$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 US$1.42 trillion last year.
Most details were to be unveiled Monday. But on Sunday, some specifics began leaking out - including the administration's record deficit projections. Concern about runaway deficits has given the opposition Republicans campaign fodder and has emboldened their efforts to block Obama programs, including health care reform.
Obama's proposed budget predicts the national deficit will crest at a record-breaking US$1.6 trillion in the current fiscal year, then start to recede in 2011 to US$1.3 trillion, a congressional official said yesterday.
The administration's new budget 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.
Other details of the budget headed for Congress include an additional US$100 billion to attack painfully high unemployment.
White House spokesman Robert Gibbs said Sunday that the administration believed "somewhere in the US$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 US$174 billion bill passed by the House in December but higher than an US$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."
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 US$400 per individual and US$800 per couple through 2011. They were due to expire after this year.
The budget will also propose US$250 payments to Social Security recipients to bolster their finances. Obama will also seek a US$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 US$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 US$447 billion in spending and is designed to save US$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.
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, which provides health care to the elderly, 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.
The new Obama budget will also include a proposal to levy a fee on the country's biggest banks to raise an estimated US$90 billion to recover losses from the government's US$700 billion financial rescue fund.
Obama's US$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 US$1.42 trillion last year.
Most details were to be unveiled Monday. But on Sunday, some specifics began leaking out - including the administration's record deficit projections. Concern about runaway deficits has given the opposition Republicans campaign fodder and has emboldened their efforts to block Obama programs, including health care reform.
Obama's proposed budget predicts the national deficit will crest at a record-breaking US$1.6 trillion in the current fiscal year, then start to recede in 2011 to US$1.3 trillion, a congressional official said yesterday.
The administration's new budget 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.
Other details of the budget headed for Congress include an additional US$100 billion to attack painfully high unemployment.
White House spokesman Robert Gibbs said Sunday that the administration believed "somewhere in the US$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 US$174 billion bill passed by the House in December but higher than an US$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."
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 US$400 per individual and US$800 per couple through 2011. They were due to expire after this year.
The budget will also propose US$250 payments to Social Security recipients to bolster their finances. Obama will also seek a US$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 US$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 US$447 billion in spending and is designed to save US$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.
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, which provides health care to the elderly, 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.
The new Obama budget will also include a proposal to levy a fee on the country's biggest banks to raise an estimated US$90 billion to recover losses from the government's US$700 billion financial rescue fund.
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