Can President Obama’s Budget Really Cut the Deficit in Half by 2013?
February 23, 2009 by Miranda Marquit
Filed under Finance
Tomorrow, President Obama will address Congress. He will talk about the economy. But what I’m really looking forward to is Thursday’s preview of the 2010 budget. This is his first budget as president, and Barack Obama insists that what he puts into place starting in 2010 will result in cutting the deficit in half by 2013. (But it’s still a $500 billion a year deficit.)
It’s a laudable goal. But is it possible?
While full details of the budget won’t actually be hammered out and released until April, there is still a lot of interest in the possiblities. On the heels of a massive economic stimulus spending and tax cut package, what sorts of things can be done in order to curb spending and raise revenues. I think you know what’s coming. I expect some of the following to be addressed on Thursday (and maybe even tomorrow):
- Pulling back on the Iraq War.
- Allowing the Bush tax cuts to expire.
- Making small increases to the capital gains tax.
- Cutting some “wasteful” government spending (however that is defined).
I’d like to think that this could work out. After all, I voted for Obama in part because I believe that focusing more on the middle class, providing a new method of health care, and focusing on job creation through improved infrastructure and a greener energy economy, are important measures and ultimately more beneficial to a prosperous economy than policy that is based almost entirely on tax cuts — and those mainly for the wealthiest. The bottom line is that Obama largely inherited this mess. And while I don’t agree with everything his administration is doing to try and fix it, I do think that those involved are on a slightly better track than the previous administration.
It’ll be interesting to see what happens in the next few days, weeks, months and years. And it will be interesting to see whether Obama’s “fiscal responsibility” promises end up being more believable than conservative “fiscal responsibility” actions that we’ve seen a great deal of since the 1980s. (After all, it was the Reagan Administration that popularized the practice of “acceptable” deficit spending.)
Do you think Barack Obama can really cut the annual deficit in half by the end of the current presidential term?
image credit: U.S. government.
It can surely be done – especially if the economy starts its recovery by the mid of next year. Withdrawing troops etc. cuts down spending but then you need to maintain those troops here or if people leave the forces – absorb them in the economy. It is slightly tough but a doable task.
I think you make a good point, Manshu! A lot of this will depend on whether the economic stimulus manages to be a success.
As a commenter said on a post I wrote on a similar topic – “Even senior administration officials acknowledge that the budget does not contain $2 trillion in spending cuts over the next decade. Instead, the figure represents Obama’s total efforts at deficit reduction, including tax hikes on families making over $250,000 a year. It also includes hundreds of billions of dollars “saved” by not continuing to spend $170 billion a year in Iraq”
I think this was referenced from the washington post, so YES Obama can cut the budget deficit, but it may be an accounting cut rather than an actual cut.
I think that Obama is hoping for a combination of things to help get the deficit down. I did mention the increased revenue for the end of the Bush tax cuts, and the savings from the Iraq War. I also think they are banking on the economic stimulus package working. I believe that you are right when you say it will mostly be an accounting cut.
Only in fairy tales will this happen. There aren’t enough rich people in this country to pay for all the spending, and don’t tell me they won’t change their behavior to avoid paying taxes. $3,550,000,000,000– have we lost our minds? Stupid is stupid no matter who is running the country. Middle class, get ready to ante up!
Let me put it this way….. if you ran your personal finances like this, you’d be filing for bankruptcy; or a corporation, the officers would be jailed for fraud. Lehman went out at leverage ratio north of 30:1. What is the leverage ratio of the US Government? Maybe it is an irrelevant question since the government owns the printing presses. But it does illustrate just how fraught with risk and poorly thought out this plan is.
Unfortunately, most of the overleveraged companies are not filing for bankruptcy and their execs aren’t being jailed for fraud. They’re taking their golden parachutes and getting government handouts. The government operates rather similarly to these businesses now. It’s sad. But you are right about personal finances. If we ran personal finances this way (and some have) we’d be left on our own.
Are you impressed with his “budget cuts” and fiscality?