Today, President Obama unveiled a $3.8 trillion budget for 2013. As reported in a CNN Money article, the new budget eliminates the Bush tax cuts on the "wealthy." But, to the chagrin of the Republicans, it does nothing to address the so-called entitlement programs such as Social Security, Medicare and Medicaid. Republicans immediately called foul and pronounced that the budget is dead-on-arrival at Congress.
The CNN Money article reveals the following details about the new budget:
- The new budget forecasts a deficit for fiscal year 2012 that will top $1.3 trillion, before falling in 2013 to $901 billion.
- The budget deficit in each year of the Obama presidency has hovered around $1 trillion, while in 2009 he promised to halve the deficit by the end of his first term.
- Obama proposes expenditures of $30 billion to modernize schools and an additional $30 billion to retain and hire teachers and first responders.
- There is also a proposal to spend $476 billion over six years on surface transportation, a big increase from current levels, and much more than other proposals lawmakers are considering.
- As for cuts, the budget proposes cuts in 210 programs which will result in savings of $24 billion in 2013 and $520 billion over a decade. For example, the budget eliminates an Air Force satellite system that is "no longer needed to meet mission requirements."
- The Pentagon plans to spend $487 billion less over 10 years.
- ON taxes, President Obama proposes to let the Bush tax cuts on the "wealthy" to expire and proposes a change on how "carried interest" is handled.
In review, the President's budget proposal essentially pays lip service to election year politics and employs smoke and mirrors to give his base a good feeling, while the Republicans are expected to reject everything. The budget takes no serious effort to reduce the deficit. The fact that the deficit will continue to be around $1 trillion is astonishing. The planned reduction in Pentagon spending, as noted in an earlier article is not really a reduction in spending. It is only a reduction in the projected spending of about $50B per year, a really insignificant amount.
More fundamentally, the proposed tax increases are not expected to get anywhere with the House of Representatives still controlled by the Republicans. Republican Senator John Barrasso of Wyoming said,
"I believe that the president has abandoned his role as leader of this nation by not being honest with the American people about the significance of the national debt. [The budget is not dead on arrival,] it is debt on arrival."
It is not clear why President Obama still persists in attempting to get the Republicans to agree to a tax hike. A very large percentage of Republican congressmen have signed the no-tax-increase pledge by Grover Norquist who seems to have a magical hold on the GOP. Thus, the President's plan is doomed to fail.
Oddly, to deal with much of the problems in the budget, there is a practical solution that requires the President to do NOTHING. The Bush tax cuts are scheduled to expire at the end of 2012. As Michael Bloomberg, the Mayor of New York City, states in the attached video, letting these tax cuts to expire for everyone, not just the wealthy, will go a long way to solve the budget problem over the next few years. Additionally, a real cut in the defense budget should be instituted instead of the phantom of just reducing planned humungous increases in the defense budget. These two actions are the only realistic actions that can be taken. The latter may also be difficult to implement due to the warmongering demands of neo-cons. But, the expiration of the Bush tax cuts will require no action at all. While many democrats will complain that the middle classes will be affected, as Bloomberg states, it is a fair approach to deal with an impending disaster.
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