Obama Presents $3.4 Trillion Budget, Says He is Fiscally Responsible…

A President can pursue any sort of political/economic agenda if s/he has an unlimited budget to do it with. Heck, a trained monkey can do same.

Obama the Money King

The challenge is that when new money goes into circulation that does NOT match the productive capacity of the economy, inflation comes about, and each unit of currency buys less than it previously could. Furthermore, since all govt spending is backed by the taxpayers, the share of each taxpayer’s debt increases, and the more money we give to the govt, the less money we get to keep, and thus spend on things we deem necessary.

Barack Obama seems to grasp this concept (in some round about way), and said the following today:

“We can no longer afford to spend as if deficits don’t matter and waste is not our problem,” he said. “We can no longer afford to leave the hard choices for the next budget, the next administration — or the next generation.”

Instead of following his statement to its’ logical conclusion, he then proceeded to unveil a $3.4 Trillion budget proposal. WaPo

The Obama administration today unveiled program details of a $3.4 trillion federal budget for the fiscal year beginning in October, a proposal that includes substantial increases for a number of domestic priorities as well as a plan to trim or eliminate 121 programs for a savings of $17 billion.

In a statement delivered at the White House after the budget details were released, President Obama defended the cuts from critics on both sides — those he said would fight to preserve the targeted programs and others who consider the reductions insignificant.

Although many government employees do valuable, thankless work, Obama said, “at the same time, we have to admit that there is a lot of money that’s being spent inefficiently, ineffectively and, in some cases, in ways that are actually pretty stunning.” He cited several examples, including a $465 million program to build an alternate engine for the Defense Department’s joint strike fighter, a program that Pentagon brass neither wants nor plans to use.

Obama said some proposed cuts are larger and more painful than others, while some would produce less than $1 million in savings. “In Washington, I guess that’s considered trivial,” he said. “But these savings, large and small, add up.” He said the cuts would save nearly $17 billion in 2010 alone, adding, “Even by Washington standards, that should be considered real money.”

Obama also stressed that the proposed cuts do not replace the need for “large changes” in entitlement spending.

The new budget documents, totaling more than 1,500 pages, fill in the details of a broad outline that Obama released in February. They include a massive appendix listing program-by-program information on the roughly 40 percent of the fiscal 2010 budget that constitutes discretionary spending, which will be set by Congress in what is expected to be a contentious appropriations process.

Also included is a separate tome that provides details on the programs targeted for cuts or elimination. If approved by Congress, those trims would amount to only about half a percent of the $3.4 trillion federal budget. But the proposed reductions are expected to be equally controversial on Capitol Hill, with some lawmakers battling for programs they favor and others demanded deeper cuts.

Congressional Republicans immediately denounced the cuts as insufficient when some details of them emerged yesterday. The criticism drew a retort this morning from White House budget director Peter Orszag, who went on MSNBC to stress that the cuts are just a start on the long-term work of curbing government spending, notably the growth of the Medicare and Medicaid health-care programs.

In any case, Orszag said, “$17 billion a year is not chump change by anyone’s accounting.”

The director of the Office of Management and Budget later likened the cost-cutting effort to fixing broken windows in an urban neighborhood.

“Just like a broken window has been shown to lead to increased crime because of the signal it sends, perpetuating inefficient programs with a shrug of the shoulders undermines confidence in government and wastes resources,” Orszag told reporters. “We can no longer afford broken-window budgeting.”

About half of the trims would come from curbing defense programs that have been identified by Defense Secretary Robert M. Gates as expendable. They include ending production of the F-22 fighter plane — thus saving $2.9 billion next year — and canceling a new $13 billion presidential helicopter fleet, which would save about $750 million in fiscal 2010.

In a letter to Congress accompanying the new budget documents, Obama said his proposals make “long-overdue investments and reforms” in education, health care and renewable sources of energy while “beginning to rein in unsustainable deficits and debt.” He said the proposed program cuts “are just the next phase of a larger and longer effort needed to change how Washington does business and put our fiscal house in order.”

“I have little doubt that there will be various interests — vocal and powerful — who will oppose different aspects of this budget,” he wrote. “Change is never easy. However, I believe that after an era of profound irresponsibility, Americans are ready to embrace the shared responsibilities we have to each other and to generations to come. They want to . . . reconstruct an economy that is built on a solid new foundation.”

In his letter and in his remarks at the White House, Obama vowed again to cut the federal budget deficit in half by the end of his first term, and he pledged to bring nondefense discretionary spending over the next decade to its lowest level as a share of gross domestic product since 1962.

Under the budget request for the Pentagon, Afghanistan war funding surpasses that for Iraq for the first time, part of a shift in priorities that Gates seeks in defense spending.

The $130 billion in war funding that is part of the 2010 budget request includes $65 billion for Afghanistan operations and $61 billion for Iraq. The budget covers Obama’s plan to increase U.S. troop strength in Afghanistan by 21,000 this year, but more funds would be required if he decides to meet the request of U.S. commanders for an additional 10,000 troops next year. The budget also includes $700 million for improving Pakistan’s counterinsurgency capability — a major increase in such assistance.

Meanwhile, the Pentagon’s $534 billion base budget — $21 billion, or 4 percent, larger than last year’s — also includes key initiatives to reshape the U.S. military for fighting today’s wars. Major shifts include increasing spending on intelligence and reconnaissance, helicopters and Special Operations Forces, while stopping production of unneeded weapons systems and terminating or restructuring other programs considered “troubled.”

In addition to the F-22 and presidential helicopter programs, proposed cuts include halting a $19 billion transformational satellite program and trimming $1.2 billion from missile defense.

Emphasizing the need to care for the all-volunteer force, the budget includes a 2.9 percent pay raise for active and reserve military personnel and increased spending on research for common wounds such as traumatic brain injury and mental health problems. Health-care costs for military personnel have ballooned in recent years and are projected to consume $47 billion of the 2010 defense budget.

With the 2.9 percent across-the-board pay raise and other compensation increases, but excluding special pay and bonuses, military salaries will average nearly $52,000 a year for enlisted personnel and $98,000 a year for officers, the document says.

The budget includes $2.3 billion more for personnel costs than the level enacted in 2009, an increase that would help pay for the Bush administration’s decision to permanently increase the size of the Army by 65,000 soldiers and the Marine Corps by 27,000 Marines.

The volume separately lists budget items for “overseas contingency operations” covering pay and other personnel costs for service members in Iraq, Afghanistan and other trouble spots. Included in this category is $115.3 billion for the “Iraq Freedom Fund” during fiscal 2010, an amount that includes up to $100 million “to support the relocation and disposition of individuals detained at the Guantanamo Bay Naval Base, relocate military and support forces associated with detainee operations and facilitate the closure of detainee facilities.”

In addition, nearly $7.5 billion is budgeted for assistance to Afghan security forces.

The proposed budget immediately came under fire today from congressional Republicans. Sen. John Cornyn (R-Tex.) charged in a speech that the Obama administration “seems to be forcing the Pentagon to make some needlessly tough choices — even as they justify trillions of dollars for domestic spending in the name of economic stimulus.” He said growth of discretionary federal spending by 7.7 percent next year, compared with 4 percent growth in defense spending while the United States fights two wars, “shows the wrong budget priorities for our country.”

Cornyn also complained about the plan to cut missile defense spending. “Given the threats we face, now is not the time to cash in a peace dividend,” he said.

However, Senate Majority Leader Harry M. Reid (D-Nev.) hailed the budget and praised Obama for reaffirming his pledge to cut waste. “No spending should be immune from review,” he said in a statement.

Obama’s list of proposed cuts is less ambitious than the hit list former president George W. Bush produced last year, which targeted 151 programs for $34 billion in savings. Like most of the cuts Bush sought, congressional sources and independent budget analysts predict, Obama’s also are likely to prove a tough sell.

“Even if you got all of those things, it would be saving pennies, not dollars. And you’re not going to begin to get all of them,” said Isabel Sawhill, a Brookings Institution economist who waged her own battles with Congress as a senior official in the Clinton White House budget office. “This is a good government exercise without much prospect of putting a significant dent in spending.”

Administration officials defended their approach, saying the list of program reductions and terminations is just the start of a broader effort to cut spending and rein in a skyrocketing budget deficit, which is projected to approach $1.7 trillion this year. They also noted that the list does not include more than $300 billion in savings Obama proposes to squeeze from federal health programs and use to finance an expansion of coverage for the uninsured.

The president has already scored a victory on the budget. Congress last week decisively approved his request to devote billions of dollars in new spending to health care, energy and education in the fiscal year that begins in October. But that plan depends in part on the administration’s ability to identify budget cuts elsewhere. The document being released today details some of those savings.

The relatively short list of proposed program cuts quickly drew fire from Republicans who learned of them yesterday.

“While we appreciate the newfound attention to saving taxpayer dollars from this administration, we respectfully suggest that we should do far more,” House Minority Leader John A. Boehner (R-Ohio) said.

In separate briefings with congressional Democrats and reporters, administration officials yesterday said the proposed savings were evenly split between defense and nondefense programs, and that many of the most significant reductions had already been revealed by the president or by Gates.

They also said the majority of the reductions were new targets not previously identified by the Bush administration. But the two lists clearly have some overlap.

Orszag told reporters today that about a fifth of the $17 billion in savings comes from cuts that were originally proposed by the Bush administration — evidence, he said, that the trims are “not ideologically based, but rather based on the evidence.”

One of Obama’s targets for elimination is the State Criminal Alien Assistance Program, which reimburses states and localities for part of the cost of incarcerating criminals who turn out to be in the country illegally. Created in 1994, the program was repeatedly targeted by Bush officials, who argued that it was ineffective. But Congress restored funding for the $400 million-a-year program because it was popular with state and local officials.

The budget document issued today said the program should be terminated “because it functions as an unfocused block grant and funds can be used for any correctional purpose.”

Orszag said the program’s funds are often used in ways “tangential to the direct cost associated with imprisoning unauthorized immigrants.”

He said the administration is “very committed” to securing the nation’s borders, noting that the budget includes $27 billion for “border and related security,” an 8 percent increase. He said this money would fund 27,000 Border Patrol agents, 33,000 detention beds and “a whole variety of other initiatives.”

Obama also wants to do away with Even Start, a program created in the late 1980s to promote literacy for young children and their parents. Starting in 2005, Bush tried annually to persuade Congress to eliminate the program. Lawmakers gradually reduced funding from $247 million to $66 million, but never proved willing to eliminate it.

Administration officials said that, although Obama considers early childhood education a priority, the Even Start program has not worked very well.

Other programs also were marked for termination on grounds that they are not needed or are not effective. Obama officials have previously identified three of them as being out of favor: a $35 million-a-year long-range radio navigation system that officials said has been made obsolete by Global Positioning System devices; a Department of Education attaché based in Paris at a cost of $632,000 per year; and a $142 million program that officials said continues to pay states to clean up abandoned mines even though that task has been completed.

In addition, the White House is proposing to cancel the Christopher Columbus Fellowship Foundation, an independent federal agency established to “encourage and support research, study and labor designed to produce new discoveries in all fields of endeavor for the benefit of mankind,” according to its Web site. The program costs $1 million a year, and officials said 80 percent goes to administrative overhead.

The proposed cuts, if adopted by Congress, would not actually reduce government spending. Obama’s budget would increase overall spending; any savings from the program terminations and reductions would be shifted to the president’s priorities.

But the more likely outcome, budget analysts said, is that few to none of the programs targeted by Obama will be terminated. Presidents from both parties have routinely rolled out long lists of spending cuts — and lawmakers from both parties routinely ignore them.

“You can go through the budget line by line, but there’s no line that says ‘waste, fraud and abuse,’” said Robert Bixby, executive director of the nonprofit Concord Coalition, which promotes deficit reduction. “What some people think is waste, other people think is a vital government service.”

The administration officials said they think their cuts will be taken more seriously by lawmakers because the economic crisis and the accompanying rise in deficit spending is focusing fresh attention on the need to trim spending. House Speaker Nancy Pelosi (D-Calif.) has told committee leaders to offer their own spending cuts by the beginning of June.

“The spirit on Capitol Hill is now cognizant of the need to find some efficiencies,” the administration official said. “I think you’re going to see proposals not just from us, but from lawmakers to find savings.”

Still, in the context of an enormous deficit, the sums under discussion are a drop in the bucket, analysts said.

“Obviously, the bottom line is frightening,” said Rudolph Penner, a senior fellow at the Urban Institute and a former director of the Congressional Budget Office. “They have a long way to go to show fiscal restraint.”

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