U.S. President Barack Obama released his fiscal 2012 budget request Monday, igniting a partisan debate that's certain to escalate in the days and weeks to come.
The details will take months to hammer out, but the outcome is clear: American households can expect a lengthy dose of austerity.
The one question still to be answered is this: Just who will be hit the hardest?
In his spending plan, President Obama calls for an end to tax breaks for wealthier individuals, families and businesses, and the eradication of some programs that were designed to help financially strapped Americans. He also proposed billion-dollar cuts in education spending, housing programs and infrastructure projects.
But President Obama's proposed cuts aren't nearly as deep as critics have been calling for.
The White House's $3.7 trillion budget request far exceeds the Republicans' goal to spend only about $2.9 trillion. Now the president and Congress face the arduous task of finding compromise in that $800 billion difference.
Republicans have lashed out at President Obama's lack of aggressive spending cuts and are criticizing his billion-dollar "investments" – his newly adopted euphemism for "increased spending."
"This budget was an opportunity for the president to lead," U.S. Sen. Mitch McConnell, R-KY, told Bloomberg News. "He punted."
Critics have also ripped President Obama for his hands-off approach to the deficit-inducing entitlement programs of Social Security and Medicare/Medicaid. The programs eat up the biggest portion of the federal budget and will continue to rise as more of the "baby boomer" generation reaches retirement age.
Meanwhile, many Obama-budget backers have lauded the administration for successfully creating a "tough-love" budget – a spending plan that reduces the deficit without creating economic chaos. They also feel Republicans who have spoken out against the Obama administration's deficit-reduction commission should stop criticizing the president for not following the commission's recommendations.
"I think it's at least a little bit opportunistic for Republicans who opposed the formation of the bipartisan deficit-and-debt-reduction commission – and then when every Republican in the House voted against it – to be criticizing the president for not including more of the recommendations that they themselves voted against," U.S. Rep. Chris Van Hollen, D-MD, said yesterday (Tuesday).
President Obama's deficit commission in December said that U.S. budget deficits had to be reduced by an aggregate $3.9 trillion through 2020 to make significant changes in federal debt. The new budget proposal cuts about $1.1 trillion over the next decade, less than a third of what the commission suggested.
House Republicans plan to release an alternative budget plan – with broader cuts – but it remains unclear if they will be willing to cut any of the U.S. entitlement programs.
This brings us to next week's Money Morning "Question of the Week:" What do you think of President Obama's budget proposal? In terms of your own expectations, did his spending cuts and tax hikes meet, exceed, or fall short of what you predicted? In terms of what this country needs, did President Obama go far enough? Or does this plan fall short? If you think it fell short, is it at least a good starting point for negotiations?
Send your answers to email@example.com. We want to hear from you!
We reserve the right to edit responses for length, grammar and clarity.
Thanks to everyone who took the time to participate – via e-mail or by posting their comments directly on the Money Morning Web site.]
News and Related Story Links:
- Bloomberg News:
Obama Budget Sets Up Fight With Republicans Over Depth of Cuts
- Money Morning:
Obama Budget Proposal Kicks Off Battle Over Spending Cuts, Tax Increases
- The Washington Post:
Republicans ‘opportunistic' in criticizing Obama budget proposal
- Money Morning:
Washington's Debt-Ceiling Debate – A Political Sham
- Money Morning News Archive:
Question of the Week Feature