Obama casts budget as effort to reduce deficit while creating jobs

President Barack Obama cast his administration’s $3.8 trillion budget as an effort to address the nation’s deepening fiscal crisis and revive the economy.

His 2011 budget request, the second by Obama’s administration, tries to balance the two seemingly divergent goals of spending money to create jobs and lower the 10 percent unemployment rate while also cutting an unsustainable deficit.

{mosads}The White House is pushing Congress to approve a $100 billion jobs bill featuring a tax credit for small businesses that hire new workers or raise employee wages.

But over the longer term, Obama intends to rely on a mix of new tax revenue, curtailed spending and recommendations from a bipartisan fiscal commission to halve the deficit from the projected $1.56 trillion this year within four years.

“We simply cannot continue to spend as if deficits don’t have consequences, as if waste doesn’t matter, as if the hard-earned tax dollars of the American people can be treated like Monopoly money, as if we can ignore this challenge for another generation,” Obama said Monday in remarks at the White House.

However, administration officials said they did not want to over-emphasize deficit-reduction for fear of cutting economic growth.

“One of the challenges is to get those deficits down in the future so we don’t choke off economic activity and job creation,” said White House Budget Director Peter Orszag.

“But we want to make sure we don’t do it too quickly so we don’t repeat the mistakes of 1937,” Orszag said, referring to the Roosevelt administration’s move to shut down deficit spending, which he said contributed to a double-dip recession.

Even with a new jobs bill, the Obama administration expects a gloomy unemployment picture. Their latest estimates project the unemployment rate to average 10 percent throughout this year and remain at nearly 9 percent in 2011 and almost 8 percent in 2012. The jobless rate won’t return to the pre-recession levels of roughly 6 percent until 2015.

Top Democrats in Congress have sounded skepticism over Obama’s deficit focus, particularly his call for a non-defense discretionary spending freeze while the job market remains weak.

House Appropriations Chairman David Obey (D-Wis.) said Monday that jobs would be the “number one focus” of his committee. Obey said House appropriators would go along with Obama’s overall spending levels but may also look at finding savings in defense spending, which the White House is looking to shield.

“We will not exceed his requested level for appropriations, but we will also not exempt any department or activity from review, including foreign aid and the Pentagon, because none of them are without waste,” Obey said in a statement.

Republicans panned Obama’s budget request for calling for more spending, which they argue hasn’t created enough jobs.

“The president has sent us more of the same — a budget that claims to be fiscally responsible, but just below the surface contains more spending, more borrowing and more taxes,” said Sen. Judd Gregg (N.H.), the top Republican on the Senate Budget Committee.

The White House has pushed back against GOP criticism by noting that much of the red ink expected over the next decade is due to tax cuts and a Medicare drug entitlement that weren’t paid for. Obama also offered a vigorous defense of his budget from criticism from left-leaning lawmakers who don’t like proposals to cut spending.

“We have to do what families across America are doing — save where we can so we can afford what we need,” he said. “I’m willing to reduce programs I care about; I am asking Congress to do the same.”

Still, the president did identify specific areas of so-called need where he proposed new spending. Specifically, he cited a 6 percent increase in the Department of Education’s budget as well as investments in clean energy jobs and scientific research.

“In the 21st century, there is no better anti-poverty program than a world-class education,” he said.

In prefacing his budget, Obama addressed critics on both sides, saying that more could not be done immediately to rectify the nation’s fiscal mess because money is still needed for job creation.

“If we had taken office during ordinary times, we would have started taking down these deficits immediately,” he said. “[But] many feared of another Great Depression so we initiated a rescue, and that rescue was not without great costs.”

Obama also heaped blame upon the Bush administration and previous Congresses for “creat[ing] an expensive new drug program, pass[ing] massive tax cuts for the wealthy, and fund[ing] two wars without paying for any of it — all of which was compounded by recession and by rising healthcare costs.”

Obama praised this Congress for reviving pay-go legislation to make sure spending cuts and tax increases are paid for and said he would create an executive fiscal commission to suggest such measures.

“[We need to hold] Washington to the same standards that families and  businesses hold themselves,” he said.