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U.S. President Barack Obama is proposing a sticker-shock federal budget that shaves the deficit, in time, to about 3 percent of the gross domestic product. The starting point, however, is a deficit of nearly 11 percent of the GDP. As such, the spending plan will provoke a variety of responses, from those who consider it the height of irresponsibility to those who see the long-term goal as laudable.
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Keep in mind, nobody calls a budget laudable until after it passes into law. That's the nature of the beast.
Obama is proposing to spend $3.73 trillion with a budget that includes a deficit of $1.65 trillion for the current fiscal year, The Wall Street Journal reported Monday.
That deficit would shrink to $627 billion by 2017 but only if the expiration of various tax breaks are allowed to proceed as planned.
The budget leaves plenty of room for campaign promises to go askew. Republicans, who promised to cut $100 billion from whatever the president proposed will be especially scrutinized this year with that pledge still ringing in everyone's ears.
Obama's strategy remains consistent: He follows along with Sigmund Freud's observation that the one thing human beings do best is to put off feeling any pain. As such, Obama is looking to nail down some of the painful decisions, but giving it time before the painful decisions take effect.
Still, the budget blows away previous figures, such as the Congressional Budget Office's estimate that the deficit would rise this year from $1.29 trillion to $1.48 trillion.
Briefing reporters on the budget package, a senior White House official said there was widespread agreement that the proposal was a starting point and that legislators from each party should now sharpen, not their pencils but their scalpels. It was time to begin making cuts.
Obama proposed to eliminate subsidies for oil and gas companies and, one week after giving a speech at the Chamber of Commerce that called for cooperation, ending various tax breaks for overseas operations of U.S. companies.
Obama has also proposed Congress find a way to pay for a $556 billion transportation bill without raising federal taxes on gasoline, The Washington Post reported.
One item that did improve compared with early projections is the amount of borrowing the government would have to do.
Early projections put borrowing for the year at $9 trillion. Obama's budget, as it stands, would require $7.2 billion in borrowing. The national debt, in time, would peak at 76 percent of the nation's gross domestic product. That would be the equivalent of owning a $500,000 home and borrowing $380,000. Any bank would tell you the margin of error for that kind of borrowing cuts the nation's resources pretty thin.
In international markets Monday, the Nikkei 225 index in Japan rose 1.13 percent and the Shanghai composite index in China added 2.54 percent. The Hang Seng index in Hong Kong rose 1.28 percent and the Sensex in India added 2.67 percent.
The S&P/ASX 200 in Australia rose 1.12 percent.
In midday trading in Europe, the FTSE 100 index in Britain fell 0.32 percent while the DAX 30 in Germany rose 0.29 percent. The CAC 40 in France fell 0.2 percent and the Stoxx Europe 600 index gained 0.35 percent.
