U.S. President Barack Obama released his fiscal 2012 budget request last week, 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 last week.
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 prompted last 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?
The following comments express readers' discontent with U.S. government spending and concerns over the country's debt-laden future.
President Obama's budget request is absolutely outrageous. We cannot pay for more borrowing. The national debt is on course to destroy the dollar and the country. He submitted a stand-back-and-watch proposal where the necessary budget cuts must be done by someone else – who will then be blamed for the cuts.
– Ray B.
The disappointment is in the leadership. It seems pretty clear to most folks that the people have spoken (the majority at least) about federal spending, and they want it reduced. The budget presented by the president is not realistic when it comes to moving toward reducing federal spending. It would be like having your annual grocery bill being $2,000 and you reducing it by six cents, so that next year you only could spend $1.999.94. Most people would not consider that a reduction, and that is using the same percent reduction that the president is suggesting that we use on the federal budget.
As the leader of the country, his leadership is not consistent with what the majority of the people want; rather he continues on his path on building a bigger federal government.
– Chris S.
The economy it seems is like an overloaded cargo ship, and President Obama wants to overload it some more until it sinks.
– Ely C.
No More War Spending
I'd much prefer closing down the fraud that is the war in Afghanistan and Iraq. Then I'd like to see a 30% reduction in military spending. Cutting aid to vets and elderly is cruel but they don't have the lobby money our military industrial complex has to throw around. Call me a socialist, I'd much rather feed and uplift our poor than give billions to the industry of meaningless death.
– Ed T.
The only good thing about President Obama's budget is that it wasn't any bigger. His thought process and understanding of how things work is sub par, which is "surprising" considering he attended Harvard Law School, and a law degree, or at least taking the LSAT, requires some logical thought.
He doesn't realize electric cars will require power plants to put out more power, thus using more fossil fuel, making the carbon dioxide argument irrelevant. Then add in the electric distribution infrastructure upgrades required. High-speed rail works in Japan because they have two large cities far apart and the land between is flat and unsettled. Plus the fact that spending $3 trillion as opposed to $4 trillion is somehow a budget deficit reduction, when anything over $1.5 trillion is a deficit.
– Thomas K.
I Could Do Better!
I could come up with better budgets for my house after a two-week binge. By the way, didn't President Obama just get back from a two-week paid-for binge? Government paid for, by the way….
– David P.
Cutting small business funding? He just doesn't understand where jobs originate!
– Thomas W.
Be sure to answer next week's question: Is your household spending more this year? Are there things like clothes, vacations or food that you plan to spend more on than in years' past? Or are you still worried about the economy and your income, and clamping down on your spending habits? Do you see signs of consumer optimism and increased spending in your city?
Send your answers to email@example.com.!
Is there a topic you want to see covered as a "Question of the Week" feature? Then let us know by e-mailing Money Morning at firstname.lastname@example.org. Make sure to reference "question of the week suggestion" in the subject line. 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