Obama budget calls for new spending to lower unemployment, help middle class

President Barack Obama unveiled a multitrillion-dollar spending plan, pledging an intensified effort to combat unemployment and asking Congress to approve new job-creation efforts that would boost the deficit to a record-breaking $1.56 trillion.
By Lori Montgomery and Michael A. Fletcher
Washington Post Staff Writer
Tuesday, February 2, 2010

As President Obama announced his $3.8 trillion spending plan on Monday, Republicans savaged it as a recipe for fiscal disaster, while Democrats defended the call to drive record deficits even higher to finance measures aimed at putting people back to work.

The budget that Obama sent to Congress would devote an additional $282 billion to "temporary recovery measures" over the next three years, on top of the huge economic stimulus package congressional Democrats pushed through during his first days in office.

As a result, the gap between the government's revenue and spending would reach a record $1.56 trillion this year. Next year's deficit would approach $1.3 trillion, forcing the government to borrow 33 cents of every dollar it spends.

Obama would raise taxes on multinational corporations and high earners over the next decade and freeze non-security spending for three years, with much of the proceeds dedicated to reducing the budget imbalance. Nevertheless, deficits would remain elevated through 2020 and the national debt would grow -- potentially threatening the country's economic stability.

"Just three days after talking to House Republicans about the importance of fiscal responsibility, President Obama is submitting another budget that spends too much, taxes too much and borrows too much," said House Minority Leader John A. Boehner (R-Ohio). "Filled with more reckless spending and more unsustainable debt, the president's budget is just more of the same at a time when the American people are looking for Democrats in Washington to listen and change course."

Voters angry about the economy and rising government spending have battered Democratic candidates recently, and congressional elections loom this fall. White House press secretary Robert Gibbs said Monday that the administration's highest priority is battling a persistent 10 percent unemployment rate, in part because a more vibrant economy would increase tax revenue, reduce spending on jobless benefits and chart a quicker path out of the fiscal wilderness.

The White House expects the jobless rate to fall only slightly, to 9.8 percent, by the end of this year and to hover around 8 percent through 2012, when Obama will again stand before voters.

Speaking at the White House, the president blamed the bleak budget outlook on "a decade of profligacy" as Republicans running the federal government cut taxes while pursuing a war in Iraq. He said he could not reduce deficits any faster without jeopardizing the nation's emergence from the deepest recession since the Great Depression.

"I think it's very important to understand: We won't be able to bring down this deficit overnight, given that the recovery is still taking hold and families across the country still need help. We will continue, for example, to do what it takes to create jobs," Obama said.

The spending plan now moves to a sharply divided Congress, where Democrats are enthusiastic about another jobs bill but anxious about additional spending. On Monday, Democratic leaders offered muted support for the budget proposal.

"The Obama administration has realized from the start that it will be impossible to bring the deficit down unless the economy is up," said Rep. John M. Spratt Jr. (S.C.), chairman of the House Budget Committee. "The budget the president is sending Congress today puts a priority on those objectives."

Republicans, however, were brutal in their assessment, saying that the spending plan offers "the illusion of restraint," in the words of Rep. Paul D. Ryan (Wis.), the ranking Republican on the budget panel.

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