Obama budget offers ambitious change agenda
Fresh from winning passage of a $787 billion economic stimulus package, the Obama administration has outlined its $3.6 trillion budget for the coming year. Its priorities represent a sharp break with longstanding Republican “trickle down” economics, which have focused on tax cuts for the super-wealthy and corporations at the expense of people-oriented programs.
Just last year, then-President Bush presented a $3.1 trillion budget (which did not count Iraq and Afghanistan military spending) that expanded tax cuts for the rich, slashed Social Security and Medicare and racked up an additional $407 billion deficit for fiscal 2009.
In contrast, Obama’s budget invests in areas critical for economic growth that will also help struggling working and middle-class people, small businesses, family farms and students: alternative energy, health care and education.
The new administration faces an unprecedented global economic crisis and inherits a $2 trillion deficit. But its budget reflects an ambitious agenda and offers a sweeping change especially from the last eight years.
“This crisis is neither the result of a normal turn of the business cycle nor an accident of history,” Obama noted in the budget’s introduction. “We arrived at this point as a result of an era of profound irresponsibility that engulfed both private and public institutions from some of our largest companies’ executive suites to the seats of power in Washington, D.C.”
The budget marks an end to the Bush tax cuts for the wealthiest Americans (returning the tax code to pre-2001 levels for families making over $250,000 a year), an end to corporate loopholes for international transactions and a scale-back on tax breaks for oil companies.
The Obama budget foresees a total of $662.1 billion for military spending in 2009, including the wars in Iraq and Afghanistan. This is almost $4 billion less than what was spent in 2008. 2010 will see only a relatively small bump of about $1 billion over 2009.
One of the most important areas of savings will come by bringing the Iraq war to an end. Obama, last week, set two timetables for withdrawal. Most U.S. troops will be pulled out by August 2010, and by the end of the following year a residual force of 35,000 to 50,000 troops will be brought home. The U.S. currently spends roughly $10 billion per month on the Iraq war.
The budget also projects savings by putting the Pentagon on a diet. In his speech to Congress earlier in the week, Obama proposed the elimination of wasteful Pentagon spending and “Cold War-era weapons programs we no longer need.”
While the short-term deficit will increase, the investments in health care, education, energy and infrastructure, along with tax fairness will, the administration argues, in the long run reduce the deficit.
All new initiatives are pay-as-you-go, Obama’s budget director Peter Orszag told the House Budget Committee.
He argued that the “path of fiscal responsibility must run directly through health care.”
The budget creates a $634 billion fund over the next 10 years to promote affordable access to health care and control the cost of skyrocketing prescription drug prices.
It does not create or promote a model for health care reform, however. Administration officials have hinted that they would like to leave those details to Congress and the legislative process.
In a teleconference with reporters, Deputy Director of the White House Office of Management and Budget Rob Nabors said the $634 billion is a “significant down payment” on the biggest issue that “affects the fiscal future of this country.”
According to the new OMB blog, curbing Medicare overpayments to insurance companies ($176 billion) created under the Bush Medicare privatization plan and eliminating Bush’s tax cuts for the richest Americans and corporate tax loopholes ($300-$400 billion) will produce savings that will be shifted to the health care fund.
More money will be found by capping Social Security benefits for the wealthy ($8 billion) and eliminating tax breaks for major oil companies ($50 billion) implemented by the Bush administration.
The Alliance for Retired Americans reports that privatized Medicare Advantage plans cost between 12 percent and 19 percent more than traditional Medicare for the same services, draining the Medicare Trust Fund and hiking out-of-pocket expenses for retirees.
The ARA, labor and health care advocacy groups welcomed the “down payment” on health care reform. A statement released by the Center for American Progress praised the proposals, but added that “comprehensive reform legislation” must follow. Such legislation would need to make care affordable and available to all and “reorient the health care system so it offers quality care geared towards prevention and wellness, not just treating us when we are sick,” the progressive group urged.
Obama announced the nominations of Kansas Gov. Kathleen Sebelius to the post of Health and Human Services secretary and health care expert Nancy-Ann DeParle to serve as his counselor and director of the new White House Office for Health Reform. At the same time, he released $155 million from the economic stimulus package to expand health clinics across the country.
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