Marketplace Scratch Pad

Tackling the budget

Scott Jagow Mar 25, 2009

The fight is on over the President’s $3.6 trillion dollar budget for next fiscal year. Today, Congressional Democrats unveiled budget blueprints that mostly jibe with what the President wants. But there will be differences, and the battle lines are being drawn.

Here’s what the President said last night about spending as the keystone to economic recovery:

Here’s what I do know. If we don’t tackle energy, if we don’t improve our education system, if we don’t drive down the cost of health care, if we’re not making serious investments in science and technology and our infrastructure, then we won’t grow 2.6 percent, we won’t grow 2.2 percent. We won’t grow.

Yes, but who’s making the investments? Does the government have to shoulder all of it?
Labor groups and liberal activists are launching national media campaigns to drive support for the President’s budget.

But conservatives are on the attack. Congressional Republicans are reportedly working on alternative budget proposals. Their main concern is a legitimate one — crippling the country with overspending. Here’s Peter Ferrera with the Institute for Policy Innovation writing for Fox News:

They are the deficits that Obama has proposed, resulting from the $1 trillion in increased spending he adopted in the no-stimulus stimulus bill, and the $400 billion supplemental spending bill he supported and also adopted the following week, and the $275 billion housing bailout he proposed the next week, and the $1 trillion bank bailout plan his Treasury Secretary just proposed this week, and the $638 billion he has proposed as a “downpayment” on a new national health insurance entitlement… Does this sound like he is “doing everything we can to reduce that deficit?”

Moderate Democrats are coming up with their own tweaks, including eventually getting rid of Obama’s prized middle-class tax cuts. From NPR:

The plan from Senate Budget Committee Chairman Kent Conrad (D-ND) would go further — scrapping Obama’s signature tax cut after 2010. Conrad promises to reduce the deficit from a projected $1.7 trillion this year to a still-high $508 billion in 2014. To accomplish that, the Senate plan would end Obama’s $400 tax cut to most workers and $800 to couples by the end of next year. Those tax cuts were part of the stimulus package.

The thing I worry about most is relying too heavily on the government to pull us out of recession. When you add up all the money that’s out the door already for stimulus and bailouts, and tack on this budget, the fiscal future has the distinct outline of an albatross.

Plus, when you consider the increase in taxes on upper incomes and businesses that will pay for a lot of this, I wonder how much “natural” stimulus there will be. I’m all for investing in science, education, energy, etc., but my word, I’d like to see at least a hint of restraint, and I’d like to see the government open the door a little wider for the private sector.

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