Obama Planning to Slash Deficit, Despite Stimulus Spending

[Emit]

February 22, 2009
Obama Planning to Slash Deficit, Despite Stimulus Spending
By JACKIE CALMES
WASHINGTON — After a string of costly bailout and stimulus measures, President Obama will set a goal this week to cut the annual deficit at least in half by the end of his term, administration officials said. The reduction would come in large part through Iraq troop withdrawals and higher taxes on the wealthy.

Mr. Obama’s budget outline, which he will release on Thursday, will also confirm his intention to deliver this year on ambitious campaign promises on health care and energy policy.

The president inherited a deficit for 2009 of about $1.2 trillion, which will rise to more than $1.5 trillion, given initial spending from his recently enacted stimulus package. His budget blueprint for the 2010 fiscal year, which begins Oct. 1, will include a 10-year projection showing the annual deficit declining to $533 billion in the 2013 fiscal year, the last year of his term, officials said.

While that suggests a two-thirds reduction, exceeding Mr. Obama’s goal of at least half, advisers note that the current deficit as a starting point is inflated by one-time expenses to stimulate the economy.

Measured against the size of the economy, the projected $533 billion shortfall for 2013 would mean a reduction from a deficit equal to more than 10 percent of the gross domestic product — larger than any deficit since World War II — to 3 percent, which is the level that economists generally consider sustainable. Mr. Obama will project deficits at about that level through 2019, aides said.

~snip~

The president will propose to tax the investment income of hedge fund and private equity partners at ordinary income tax rates, which are now as high as 35 percent and could return to 39.6 percent under his plans, instead of at the capital gains rate, which is 15 percent at most.

Senior Democrats in Congress joined with Republicans in 2007 to oppose that increase. But with Wall Street discredited and lucrative executive compensation a political target, the provision could prove more popular among lawmakers.

Mr. Obama will also call for letting the Bush tax cuts on income, dividends and capital gains lapse after 2010 for individuals who make more than $250,000 a year. But while the top rate for income would rise to 39.6 percent, the top rate for capital gains and dividends would be 20 percent.

~snip~

Mr. Obama will propose cutting a variety of programs, including the Medicare Advantage subsidies for insurance companies that cover seniors who can otherwise acquire health coverage directly from the government. Another target is spending on private contractors, especially for defense, which spiked during the Bush administration. And he will scale back some promises, including his proposal to double money for foreign aid.

~snip~

http://www.nytimes.com/2009/02/22/us/politics/22budget.html?th&emc=th


You, too, can try to balance the budget!

Be a Budget Hero - Balance the Budget Game:
http://marketplace.publicradio.org/features/budget_hero/

edited to add link

[babylonsister]

1. People voted for change, they're getting it.

:fistbump:

[Emit]

4. My teenager just completed an assignment in her government class this past week

An assignment to balance the budget (which is where the link came from - she came across it while doing some research) - She said it was one of the toughest assignments she's had yet in that class, and it opended her eyes to how difficult a task it is, once you see how one thing effects another, etc. It's such a daunting task this adminstration has in front of it.

:hi:

[AllentownJake]

2. You thought the stimulus package was partisan

Wait till the repubs have to deal with the fact their precious tax cuts for the wealthiest Americans in the country are going away.

[DJ13]

3. This is not the time he should be worrying about the deficit

If I didnt know better I would swear Obama is confused and believes he's a Republican with this kind of talk at this time.

(Wasnt it the spending the Repukes were using as an excuse to vote against the stimulus bill just a week ago?)

This is a bad sign if you're hoping for any meaningful progress towards a national healthcare program, or increased spending on programs to alleviate poverty.

[Thrill]

5. The Budget is going to lay the ground work for big Healthcare Reform

And you have to put a plan in place to cut the deficit. Unless you want Obama to be a one term President. And he can still increase spending on the programs we care about with this budget. You can't expect Obama to spend, spend, and have know plans to pay for it.

[DJ13]

7. FDR was convinced to cut the deficit in 1937

The depression went into a tailspin that took WWII to get us out of it.

This is NOT the time to contemplate cutting the defict.

[babylonsister]

8. No, I think it's a great time to do so.

How can the rethugs dispute that? But he's throwing in a little thing about tax cuts for the rich. That's pissing them off. :D

[DJ13]

9. How can the rethugs dispute that?

Why play up to Republicans at a time when we need spending more than we need to worry about the budget?

Thats a bad idea.

[babylonsister]

10. Obama is not 'playing up' to anyone, he's trying to fix this country.

He has this in his new budget plan. The one McConnell hates...because.

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=5110554&mesg_id=5110554

[DJ13]

11. Im sorry, but when were in the midst of a depression

talking about dealing with the deficit IS playing up to Republicans.

They are the only ones (now that they lost) who are making noise about deficits right now.

FDR bought into the Republican deficit trap just as his programs were starting to ease the depression in 1937, and our economy fell apart up until we entered WWII.

[babylonsister]

16. Why are you giving rethugs any credibility? And this isn't

FDR. I'm telling you, wait and watch and listen. That's what I'm doing.

[Hansel]

27. Obama is not playing up to the Republicans. He's keeping a campaign promise.

Obama said throughout his campaign that he was going to get rid of wasteful spending and raise taxes on the rich. It's a major part of the reason I supported him.

Whether or not balancing the budget has any negative impact depends upon how you go about it. Obama has "book smarts" coupled with something very few other politicians have--"street smarts". I'm sure he will not repeat the mistakes Roosevelt might have made in balancing the budget.

An extreme amount of money went down the black hole of Operation Iraq Throw Away, set aside that the war was unnecessary in the 1st place. Billions of $'s in cash simply disappeared. They built that monstrosity of an embassy. No bid contracts. Hired killers paid 5 times as much as our troops along with extremely expensive toys for them to play with. Ridiculously expensive "star wars" type weapons programs so the boys could have their toys while their friends got undeservedly richer. Building then rebuilding because the construction was so bad. Inflated supply prices paid to private contractors.

This is just one example. Why would Obama continue to "gift" billions for such obvious waste? He can cut the budget in half simply by getting rid of the wasteful "gift-giving" Republicans have put in place since Reagan. Medicare part D, for example, where the government can not negotiate lower costs with the drug companies.

The word "privatization" should make taxpayers in this country cringe. It is nothing but a way for law makers to appease the "lobby" gods. Addressing the waste caused by some forms of privatization could easily save this country hundreds of billions of dollars. As far as jobs, someone has to do the processing whether it's private business or the government.

Raising taxes on the rich by 4% is not going to collapse the economy. Nor is reducing the tax margin on their deductions to comparable levels with the other 95% of taxpayers. They are still money hungry bastards and they are not going to stop making money or donating to reduce their taxes just because they have to pay an extra 4 cents on the dollar or can't deduct as much.

There's not much here that is going to appease the Republicans. They want him to cut "entitlement programs" or any other program that benefits average Americans over the rich. He's going to go in a different direction. For example, when he talks about "fixing Social Security" he's talking about raising the cap on the amount of income you earn where you stop paying this tax. The Republicans think "fixing Social Security" means privatizing it. In fact, instead of appeasing them, Obama is likely to use their own terminology to stick it to them. It will be fun.

[endersdragon34]

19. Yeah... until China stops loaning us money

We are certainly a high credit risk by now.

[Kurt_and_Hunter]

6. Ridiculous

[incapsulated]

12. Those opposing this, answer this...

"The reduction would come in large part through Iraq troop withdrawals and higher taxes on the wealthy."

Explain your opposition to this.

[DJ13]

13. Not opposed to either, just opposed to worrying about spending at this time

The money being spent on Iraq could be spent on health care instead of not spent at all.

That would be a stimulus to our economy, which desperately needs it.

Just ending that amount of spending to reduce the deficit in a near depression is a bad use of the money.

[Emit]

14. I'm not sure I follow you. The article notes just that - invest in what we need, cut what we don't

In his weekly radio and Internet address on Saturday, Mr. Obama said his first budget was “sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don’t, and restoring fiscal discipline.”

~snip~

Full details of Mr. Obama’s budget for the 2010 fiscal year will be released in April. The outline on Thursday will make clear that he intends to push ahead on promises to contain health care costs and expand insurance coverage, and to move toward an energy cap-and-trade system for controlling emissions of gases blamed for climate change.

“The president believes there are essentially three areas that have to move forward even as we pare back elsewhere — health care, energy and education,” said David Axelrod, his senior adviser. “These are the bulwark of a strong economy moving forward.”

[endersdragon34]

21. Ummm... what did he cut?

The deficit went up several 100 billion... what exactly did he cut?

[Unsane]

24. maybe you could read it

[endersdragon34]

26. I see he plans to cut some stuff

But he hasn't yet. He won't cut the Bush tax cuts for 3 more years, and nothing that counts for a trillion dollars, much less 1.75 trillion. He plans to end a war while scaling up another and possibly starting yet another... there are no tough choices here. Cutting this budget deficit in half will be easy... he caused most of it and the recession is going to end well before 2013 anyway... how about he cuts last years deficit in half, that will impress me.

[babylonsister]

17. Nevermind. nt

[endersdragon34]

20. Easy

He plans to put more troops in Afghanistan and most likely western Pakistan (look it up, he has already mentioned it several times, certainly to catch any major terrorists hes going to have to go there) which will most likely cancel any lower costs and the wealthy don't earn enough to cover a 1.75 trillion dollar deficit.

[firedupdem]

15. Sounds good to me....

He's keeping his campaign promises. Ending these wars and letting the bush tax cuts expire will stop some of the bleeding. I just wish both could happen sooner.

[damonm]

18. More political genius -

makes the Rethugs oppose things they've supported in the past. Exposes their moral and ideological bankruptcy, and pushes them ever more firmly into CABL. ("Crazy-Assed Base" Land)

[endersdragon34]

22. When did the Republicans support

A 1.75 trillion dollar deficit. I am an independant... but I can't seem to remember that...

[RIFF RAFF]

23. Republicans only care about running up deficits when democrats are in charge.

When did the republicans support the deficit? They were the ones who caused the deficit. As usual.

[endersdragon34]

25. Democrats vs. Republicans

Republicans caused about a 450 billion deficit (that would be their biggest)... Democrats support a 1.75 trillion dollar deficit... now I will assume you can do basic math and can figure out which is bigger...

[backscatter712]

28. Obama had a very good argument for the stimulus in his SOTU speech...

By spending money now on the stimulus, we're actually saving money down the road.

Government tax revenue is tied directly to the state of the economy - if the economy's shitty, businesses aren't making money and people are unemployed and not making decent wages, that's less tax money flowing into .gov coffers.

As in trillions less over several years if the economy was allowed to stay in the toilet.

By spending money now, and working to get the economy booming again, that means that down the road in those years when the economy would have been in the toilet, but is booming instead, the government will be raking in trillions of dollars more tax revenue. That's money that will be used to reduce the deficit, pay for health care, etc. etc. etc.

In other words, the stimulus will pay for itself, several times over. If the stimulus package didn't get passed, the deficit and the national debt would actually be higher!