Obama Unveils $3.8 Trillion Budget
Despite deep and widespread concerns about fiscal responsibility among a growing segment of the American population, on Monday the Obama administration unveiled a second consecutive budget that will produce a deficit topping $1 trillion.
The $3.8 trillion budget proposal for the 2011 fiscal year, which begins Oct. 1, will result in a $1.3 trillion shortfall, which is 8.3 percent of gross domestic product.
However, the White House blamed the extraordinary actions it was forced to take in order to prevent the economy from plunging into full-blown depression, and vowed to tackle the debt over the coming decade.
“In the long term, we cannot have sustainable and durable economic growth without getting our fiscal house in order,” Obama said in a statement with the budget’s formal release.
The proposed budget features increased spending on education, job creation, clean energy and defense. At the same time, the Obama administration is proposing raising additional revenues by allowing the Bush tax cuts for the wealthy to expire, imposing fees on the nation’s largest banks, eliminating fossil fuel subsidies and freezing discretionary spending for three years.
In addition, the Obama administration is proposing to end tax loopholes that allow American multinational corporations to avoid taxes on overseas profits. The administration claims that the measure could produce an additional $122 billion in revenue over the next decade.
While the spending freeze is not across the board, some agencies such as Health and Human Services, the Justice Department and others will see very little increases in their budgets. In all, the administration said, 120 programs would be totally eliminated or significantly reduced, which will save the government $20 billion over the next 10 years.
“We’re not putting forward an across-the-board freeze, but rather an overall cap on non-security discretionary funding in which key investments are expanded but we cut back on programs that are ineffective, duplicative, or just wasteful,” White House budget director Peter Orzsag said in a blog post on the White House’ Web site.
Education spending will get a large boost with an additional $3 trillion for primary and secondary education and another $17 billion for Pell Grants. The White House has proposed a $100 billion job creation package and another $4 billion for infrastructure projects.
Republicans were already on the offensive, slamming the White House for what they said was out-of-control spending and increased taxes in the new budget, even though the vast majority of the tax increases are directed at the wealthy.
“I don’t think anybody in the country thinks we have a problem because we tax too little. I think the problem is we spend too much,” Senate Republican Leader Mitch McConnell (KY) said in a statement.
Overall, the White House predicts that it will add roughly $8.5 trillion to the national debt over the next decade, which it said it was serious about tackling as soon as the economy turns around and job creation is evident.