In budget, Obama tries to balance vision against current needs

Peter Orszag, Director of the Office of Management and Budget, explains how President Barack Obama's proposed budget would cut the federal deficit. (Feb. 1)
By Alec MacGillis
Washington Post Staff Writer
Tuesday, February 2, 2010

President Obama, who set out on the campaign trail three years ago to "transform a nation," is increasingly doing all he can simply to keep his long-term vision in view amid the more urgent pressures bearing down on him.

The $3.8 trillion budget he proposed on Monday points to a tension he has been grappling with since taking office: how to balance the immediate needs for stimulus and deficit reduction against his agenda for sustained, broad-based growth.

The budget envisions an additional $266 billion to jolt the economy and extend relief to states and unemployed workers. And that is matched with a gesture at spending restraint -- holding level for the next three years overall most discretionary spending.

But tucked alongside these efforts, both pitched to the current political moment, is the president's attempt to keep alive his initial domestic agenda in education, renewable energy and other areas -- initiatives Obama thinks will be necessary to produce true long-term growth after the economy claws back from recession. Last year's budget proposal also made big statements in these areas, along with the third major domestic priority of health-care reform.

This year, amid growing disquiet over spending, the White House is more constrained. But it is still seeking to expand what it sees as its longer-term investments, proposing increases of 6 percent in K-12 education and in research and development in the Energy Department. The same motivation is behind the 8 percent increase for the National Science Foundation and the creation of a new infrastructure investment fund, seeded with an initial $4 billion.

"We . . . continue to lay a new foundation for lasting growth," Obama said in introducing the budget. "Just as it would be a terrible mistake to borrow against our children's future to pay our way today, it would be equally wrong to neglect their future by failing to invest in areas that will determine our economic success in this new century."

Having announced a freeze in overall discretionary spending, the White House needed to find reductions to balance out the spending, and is proposing cutting a few big-ticket items. It would halt production of the C-17 cargo plane, end NASA's program for a return to the moon and reduce payments to wealthy farmers.

Reductions in small bites

But belying the heated rhetoric on both sides of the political spectrum last week about the "freeze," the majority of reductions would come in small bites -- preventing low-income workers from receiving the earned-income tax credit in advance, cutting back the Army Corps of Engineers' duties, eliminating duplicative programs, such as an $18 million brownfields initiative.

"At first glance, this very much fits the notion of a scalpel," said John Irons, a budget expert at the left-leaning Economic Policy Institute. "It looks like there's a big boost to the areas of the budget that would seem to be sound investments in the future. And it looks like they're nicking the other programs here and there to pay for it."

The real challenge, analysts say, will lie in whether the administration can get the budget's main features through Congress. Nearly half the 53 reductions the White House seeks are items that it also proposed last year, to no avail.

Even more crucial to the White House's budget framework are the tax and revenue proposals it is offering once again after they were rejected on Capitol Hill last year. This includes reductions in subsidies for oil, gas and coal companies; higher tax collections from multinational corporations; and a reduction in deductions wealthy taxpayers can claim for mortgage interest and charitable donations.

"All of these things are going to be very difficult, given the penchant of some members of Congress to rail against deficits and then vote against measures to reduce them," said Robert Greenstein, director of the liberal Center on Budget and Policy Priorities.

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