Obama defends $3.7T budget; deep cuts needed 'to walk the walk'

Steep cuts are necessary to rein in the deficit, President Obama said Monday in defending his 2012 budget.

The president also defended new spending proposed by his budget in infrastructure, education and broadband access as critical to helping U.S. businesses and workers compete in the global economy.

ADVERTISEMENT
Cuts in the $3.7 trillion budget are a “down payment” on even deeper cuts Obama said he would work with both parties in Congress to make.

He said the cuts to education, housing and home heating assistance to the poor include reductions to programs “I care about deeply.”

“But if we're going to walk the walk when it comes to fiscal discipline, these kinds of cuts will be necessary,” Obama said.

The president also said the five-year freeze in discretionary spending in his proposal eventually will lower spending compared to GDP to a rate lower than any president since Eisenhower.

The proposed cuts would eliminate about $30 billion in spending in the next fiscal year, compared to spending in 2010, according to the budget. It calls for reductions or suspended spending in 200 different programs.

The budget cuts the Teacher Quality Block Grant program by $500 million and the Career and Technical Education program by $280 million. It would reduce by $300 billion Community Block Development grants that provide affordable housing.

Overall, the administration says the $3.7 trillion budget for fiscal year 2012 would usher in $1.1 trillion in savings, much of them through the five-year freeze.

The administration justified the proposed cuts by saying they were made to unnecessary or duplicative programs. But it also said some of the cuts were painful.

“To achieve these savings, we went through the budget carefully to identify programs that were either ineffective, duplicative or outdated and thus needed to be cut or consolidated,” the administration states in the budget. “Others are programs whose mission the Administration cares deeply about, but meeting our fiscal targets is something that will take shared sacrifice by us all.”

To maintain maximum Pell Grant awards for higher education, the administration would eliminate federal funding for summer school programs and an interest subsidy for graduate students.

The Agriculture Department’s single-family home loan program is cut 81 percent to $211 million. The EPA’s water infrastructure funds are cut by $950 million. The administration would also reduce funding for home heating assistance to the poor by $2.5 billion.

Liberals groups criticized many of the cuts.

“Every cut to necessary programs like Medicare, education and heating for low-income seniors needs to be judged in the context of the unnecessary tax cuts for Wall Street millionaires that passed at the end of last year,” said Adam Green, co-founder of the Progressive Change Campaign Committee, which has frequently criticized Obama. 


He also seized on the budget’s call for Congress and the administration to work on corporate tax reform.

“Proposing even more tax breaks for Wall Street banks while slashing and burning necessary government programs is right-wing radicalism, and no Democratic president should be part of it,” he said.

The left-leaning Economic Policy Institute criticized the president for turning too quickly toward deficit reduction, through a five-year freeze on non-security spending. It said targeted investments in innovation, education and infrastructure were too small.

ADVERTISEMENT
"The president’s budget, though severely flawed, is far better than alternatives supported by many in Congress – a low bar, indeed," it noted.

A key Democrat, however, gave an early positive assessment of the budget.

“There is no question President Obama has made some tough decisions. But this budget also keeps in mind that we need to make smart choices that will create more jobs, lift up middle-class families, and keep our economy growing, House Budget Committee Ranking Member Chris Van Hollen (D-Md.) said in a statement. “While I don't agree with everything in this budget, it is a responsible place to start.”

In a conference call with reporters, Van Hollen said he believes the majority of Democrats will support a five-year freeze in spending. If they disagree with specific cuts, he said, they will have to come up with offsets for keeping them.

Van Hollen said he expects liberals to be angered by some of the cuts.

“There are some very tough cuts in this budget, certainly you are going to find opposition to the president’s specific cuts,” he said.

Van Hollen said he would not have made the cuts to EPA’s water infrastructure spending.

Republicans have criticized Obama for not cutting enough, and for proposing some new spending.

House Republicans are looking to cut $61 billion in non-security discretionary spending in the last seven months of fiscal 2011, and want to go further by making more cuts in 2012.

But Obama defended his proposed spending, saying that while cuts are necessary to get the country's fiscal house in order, "we can't sacrifice our future in the process."

This post was last updated at 11:46 a.m.


More in Finance

GOP chairman: Obama has 'worst record' on national debt

Read more »