Obama’s $3.8 trillion budget focus: jobs, jobs, jobs

WASHINGTON — Fighting wars and lingering effects from a deep recession, President Barack Obama will run up a record $1.56 trillion budget deficit this year and is proposing a 2011 federal budget that would spend $1.27 trillion more than the government takes in next year.

Even with plans to scale back after that, his budget proposal Monday calls for deficits of more than $700 billion a year for at least a decade and relies on outside help from an as-yet-unappointed commission to bring them down more.

“It’s a budget that reflects the serious challenges facing the country,” Obama said at the White House. “We’re at war. Our economy has lost 7 million jobs over the last two years. And our government is deeply in debt after what can only be described as a decade of profligacy.”

His budget plan would spawn deficits totaling $8.53 trillion over the next 10 years.

Democrats in Congress called the Obama budget the best that can be done given the high costs of war and recession.

Budget watchdog groups gave Obama credit for some parts of his proposal, but warned that more is needed to keep spiraling deficits and debts from damaging the economy permanently.

Republicans, who last week helped shoot down a Senate proposal to create an independent deficit-cutting commission that they once supported, called instead for a plan of spending cuts and caps, including scaling back spending increases on entitlements such as Medicare and Social Security.

The president’s proposed budget would spend $3.83 trillion in the federal fiscal year beginning Oct. 1, a 3 percent increase over the current year.

The budget foresees the government taking in $2.57 trillion in taxes and other revenue, an 18.6 percent jump as the deep recession ends and a growing economy boosts income.

He proposed making Bush-era tax cuts permanent for those who earn less than $250,000 annually, and ending the tax reductions for those who make more than that.

Two key factors would help drive up spending or increase the deficit: war and government programs to create jobs.

First, Obama is spending more for war than he expected.

A year ago, he estimated that spending on war and intelligence operations in Afghanistan, Iraq and Pakistan would drop from the $145 billion he inherited to $129 billion in the current fiscal year. Instead, he’s sending another 30,000 to 35,000 troops to Afghanistan and is asking for another $33 billion for the current year, boosting the total to $162 billion, and for $159 billion next year.

Second, Obama continues to propose new spending and tax cuts to help spark the economy and create jobs, atop the $787 billion stimulus package enacted last year.

Among his new proposals: $100 billion in tax cuts and credits for small businesses and spending on infrastructure to create jobs and increase wages.

Even with the added boost, the White House forecasts slow progress from the current unemployment rate of 10 percent. Christina Romer, the chair of the Council of Economic Advisers, forecasts that the jobless rate would drop to 9.8 percent this year, 8.9 percent in 2011 and 7.9 percent in 2012.

Obama also urged Congress to take steps that he said would shave $1.2 trillion off the deficit over the next 10 years including freezing overall spending for three years for some federal departments and programs outside of national security, Medicare and Social Security.