Obama’s $3.55 trillion budget proposal represents a gamble that the American people are ready for the sort of change they embraced when they elected him last November.
His goals are ambitious and it appears the only thing bigger than his ambitions are the obstacles they must clear.
That’s why President Obama warned on Saturday he was bracing for a fight against powerful lobbyists and special interests who sought to pick apart the $3.55 trillion budget he wants to advance his agenda of reform. “I know these steps will not sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they are gearing up for a fight as we speak. My message to them is this: so am I,” he said.
And a fight he will have. Already waves of opposition are pouring in. In a radio response, the Republicans stuck with their campaign remarks from last year, warning that Democratic spending priorities threaten to destroy the American dream that hard work can build a better life for each successive generation of citizens.
“This week, the president submitted to Congress the single largest increase in federal spending in the history of the United States, while driving the deficit to levels that were once thought impossible,” said Senator of North Carolina Richard Burr.
He said Obama’s budget commits the government to a billion dollars a day in interest on the debt over the next decade. “Now, instead of working hard so our children can have a better life tomorrow, we are asking our children to work hard so that we don’t have to make tough choices today,” Burr said. The White House predicts the United States will enter the new fiscal year with a budget deficit of $1.75 trillion – the largest since World War II, and four times the size of this year’s deficit.
But Obama has pledged to cut it in half by the end of his first term. Specifically, administration officials say the annual gap between federal spending and tax collections will fall from something north of $1.4 trillion this year — the highest since World War II — to $533 billion in 2013. He said a page-by-page examination of the federal budget had already identified $2 trillion in potential savings over 10 years.
But when you look at it from a technical standpoint, this year’s budget deficit has already been bloated by major spending in the stimulus package and various financial-sector bailouts which include expenses unlikely to be repeated in future years.
The nonpartisan Congressional Budget Office (CBO) recently predicted that the deficit could be halved by 2013 merely by winding down the war in Iraq and allowing some of the tax cuts enacted during the Bush administration to expire in 2011, as Obama proposed. That alone would cut the deficit to $715 billion, according to the CBO.
As Senior Republican on the Senate Budget Committee Judd Gregg (who recently withdrew as Obama’s nominee to head the Commerce Department) said, “You’re not getting savings if you’re assuming spending that isn’t actually going to occur.”
It’s tough to side with President Obama when you’re an investor and I know most of you are. But I have to admit that his stance and his utmost confidence in his proposal almost make me feel at ease despite all of the loopholes, wordplay and shortcomings of his proposed budgets. Almost.
The fight has begun. Which side are you on?