Economic Outlook: Smart, but not tough

President Barack Obama has revealed a budget that, once again, will give the Republican Party a chance to show that vitriol is more fun than compromise.

What's to hate? The president proposes to reduce the federal deficit by $4 trillion in the next 10 years, but avoids major cuts in healthcare benefits. This reveals right away that the budget proposal is smart, but isn't particularly tough.

Obama's blueprint for spending would cross out a few corporate tax breaks, answering the national embarrassment of corporations, such as General Electric, that are sitting on mountains of cash and making huge profits while laying off workers and paying little to no taxes. Billionaire Warren Buffett said he would like to do his share and, if he is to be believed, so would many of his ultra-rich friends. But Buffett is not a corporation. He is richer than many of them, but he is still not a corporation.

The president's proposal is not just groping in the dark. He knows that a few Republicans view erasing loopholes as a face-saving way to increase revenues, but closing a loophole is not a new tax.

At least that kind of rationale should fool voters until Election Day. And that's close enough for government work, as they say.

That makes this budget smart, but not particularly tough. But Obama is not going to have a budget at all if it isn't palatable to at least a few congressmen from the other side of the aisle.

Of course, what's a budget without wishful thinking? Obama is expecting government spending to increase 0.2 percent in fiscal year 2013, which begins Oct. 1.

He is also projecting revenues will increase 17.5 percent. That's precisely like budgeting your household on the expectation that next year you will get that 17.5 percent raise after all. If you put in the swimming pool this year based on that raise and the raise doesn't come through, the deficit goes up and few are fooled.

In international markets Tuesday, the Nikkei 225 index in Japan added 0.59 percent, while the Shanghai composite index in China lost 0.3 percent. The Hang Seng index in Hong Kong rose 0.15 percent, while the Sensex in India gained 0.43 percent.

The S&P/ASX 200 in Australia shed 0.99 percent.

In midday trading in Europe, the FTSE 100 index in Britain was down 0.11 percent, while the DAX 30 in Germany rose 0.18 percent. The CAC 40 in France and the Stoxx Europe 600 were both flat, falling less than 0.01 percent.