New York Times Editorial: Mr. Obama’s New Budget

New York Times Editorial: Mr. Obama’s New Budget
Copyright by The New York Times
Published: February 1, 2010
http://www.nytimes.com/2010/02/02/opinion/02tues1.html?th&emc=th


President Obama got his priorities mostly right in the new $3.8 trillion budget for the fiscal year 2011. It calls for increased spending on education and clean energy technology, shows some restraint on the defense budget, and, most importantly, calls for more spending on job creation. It also rightly lets the Bush-era tax cuts for high-income Americans expire as scheduled at the end of 2010.

When all the new spending and spending cuts are added in, and various tax increases and tax cuts are accounted for, the increase in the deficit, compared with what it would have been without any changes, is $120 billion. That is a lot of money. But it is not too much at a time of economic weakness, when deficit spending is needed to boost growth and put Americans back to work.

Still, if you’re feeling sticker shock, we are, too. It is important to remember that most of that $3.8 trillion, nearly $2.4 trillion, is for mandatory spending — on programs like Medicare, Medicaid, Social Security and for interest on the national debt. Medicare and Medicaid alone will cost $788 billion; that should be another reminder of why the country needs health care reform.

Congress also cannot waste any more time posturing about the deficit rather than doing what is needed to get Americans back to work.

In his budget, Mr. Obama has called for $100 billion in sound new job-creating measures, including tax credits for hiring and new investments in green jobs and infrastructure projects. The budget also proposes spending $166 billion for other job-related initiatives, including nearly $50 billion to extend federal unemployment benefits this year.

Millions of families need those benefits to meet their basic needs. And without their spending, more American businesses would face hardship, leading to more layoffs and ever higher unemployment.

The House passed a $154 billion jobs bill late last year that incorporates some of the president’s ideas. In the Senate, all of the Republicans and a handful of Democrats have balked, insisting that they are far more concerned about adding to the deficit. That is a false and dangerous economy. No one can be happy about the $1.3 trillion deficit projected for 2011. Still, Mr. Obama’s budget calls for steps to begin to chip away at it.

The budget rightly calls on the country’s high-income earners and wealthy corporations — the big energy companies and the banks, all cosseted during the Bush years — to carry more of the burden. Letting the Bush-era tax cuts on the rich expire at the end of this year would bring in nearly $700 billion over a decade. A fee on big banks would raise $90 billion in that time, and an elimination of some subsidies for large energy companies would raise another $40 billion.

Mr. Obama is right that the recovery is too fragile to make deep cuts in government spending. But his proposal to freeze nonsecurity discretionary spending, starting next year, is a credible commitment to find more serious savings once the economy rebounds.

The fact is, there is not enough money in any of the discretionary accounts to wrestle the deficit under control. For that, the nation needs health care reform and tax reform, including new sources of tax revenue.

The alternative to spending more today on job creation is a prolonged downturn, or worse, renewed recession — which would only force deficits higher. In the medium- and long-term, the country must deal with the deficit and the structural problems that threaten everyone’s economic future. Mr. Obama’s budget is a step in the right direction for both problems. Now he must press Congress to do its part.