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White House Budget Aims for $2 Trillion in Savings Over 10 Years
Wednesday, February 25, 2009
1:30 PM

Although Congress was still awaiting the release of the White House's fiscal year (FY) 2010 budget outline at presstime, lawmakers were provided with a glimpse into President Obama's key objectives last night. One such goal involves attaining at least $2 trillion in federal savings over the next decade. 

"With the deficit we inherited, the cost of the crisis we face, and the long-term challenges we must meet, it has never been more important to ensure that as our economy recovers, we do what it takes to bring this deficit down," Obama said during his first speech to Congress. "I’m proud that we passed the recovery plan free of earmarks, and I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities."

The White House gets to the $2 trillion mark by proposing both spending cuts and revenue raisers (i.e., tax hikes).

On the spending side, the biggest savings will come from the Pentagon via a two-pronged approach. First, Obama is proposing to end funding for "Cold War-era weapons systems we don't use" as well as targeting new programs that have a history of cost overruns, including those located in his own back yard. On Monday, for example, the president questioned the costs associated with procuring a new fleet of Marine Ones, and acknowledged that he had asked Defense Secretary Robert Gates to conduct a "thorough review of the helicopter situation."

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The second prong is the withdrawal of most U.S. troops from Iraq, which will result in reduced spending for military operations overseas. The president is expected to lay out a detailed troop redeployment plan on Friday.

However, both plans may not prove to be such a promising budgetary windfall. Major defense contractors will likely play the "jobs" card if one of their projects is on the chopping block, telling lawmakers -- and the public -- that significant cuts will force them to lay people off during a recession. In addition, the costs associated with "resetting" equipment used during military operations in Iraq will run in the billions, not to mention the additional health care costs associated with Iraq veterans returning home.

On the tax side of the ledger, Obama is proposing to allow the Bush tax breaks to expire for families earning more than $250,000 a year, and "ending the tax breaks for corporations that ship our jobs overseas." The former will be a relatively easy task since these tax breaks will expire at the end of 2010 without any action required from Congress and the administration.

The Obama budget also proposes to:

  • Terminate funding for ineffective education programs.

  • End direct payments to large agribusinesses "that don't need them."

  • Eliminate no-bid contracts in Iraq.

  • Root out waste, fraud, and abuse in Medicare.

Obama said last night that his fiscal blueprint will focus on energy, health care, and education initiatives that will build on the economic recovery package he signed into law last week. The White House is requesting $15 billion each year to develop alternative energy technologies such as wind and solar power, advanced biofuels, clean coal, and for automobiles.

"We'll invest in innovative programs that are already helping schools meet high standards and close achievement gaps," Obama said of his education agenda. "And we will expand our commitment to charter schools."  With respect to health care, the president said he will propose a down payment on reforms that are "paid for in part by efficiencies in our system that are long overdue."

 

© Copyright Capitol Hill Reports, Inc. (2009). No claim to original government works.