Mr Obama’s budget reduces the projected deficits between now and 2020 by just over $2 trillion, mainly through reductions in planned spending on overseas military operations and proposed tax changes. The concern is that many of the recommended tax changes may not stick. Mr Obama’s Financial Crisis Responsibility Fee (the so-called bank tax) will probably survive, but other items, including reform of the international tax system and repeal of fossil-fuel subsidies, were proposed last year and failed to make it through Congress. Measures boosting taxes on upper-income households (those earning above $250,000 a year) should fare better, but the decision to sustain George Bush’s tax cuts for everyone else is short-sighted.
If Congress balks, as expected, at some tax provisions, then deficits will prove larger than budgeted for. But even the president’s proposals fail to cut deficits to the 3% target. To make up the difference, Mr Obama will create a deficit commission by executive order, charged with making recommendations for long-run budget sustainability. Yet Congress had earlier failed to pass its own proposal to create a bipartisan deficit commission, which would at least have been able to force a yes-or-no vote on its recommendations. Republicans who had praised the idea cynically reversed themselves when the president signalled his support. And even before its defeat, the Senate voted 97-0 to shield Social Security from the commission’s purview.
The aversion of Congress to hard decisions is no small obstacle for the president. But Mr Obama has done himself no favours by fudging the hard budget choices which must ultimately be made. It could be a costly failure. The American government has room to continue supporting the weak economy, but only for as long as markets believe that the United States will eventually make good on its obligations. In this budget proposal, Mr Obama has not done anything to reassure them.
1st Quarter and it’s first down on their own 10 yd line. The Obama administration makes a daring play and…wait…no, I can’t believe it…THEY’RE PUNTING!!! It’s the biggest game on the planet and the stakes have never been higher…and they choose this moment in history to PUNT!!!
The problem is not that we are not taxed enough. The problem is that we are spending too much.
YBIC,
Phil Snyder
On of the fundamental realities is that Congress cannot bind future Congresses. Any economic plan that will hurt the electability of a Congress down the road is going to be undone by that Congress. That of course is why all these economic plans program the cuts and pain 10 years out–so someone else gets hurt.
If Obama and the Democrats really mean it then they should enact the painful things now to take effect at once.