Obama budgets job creation as highest priority
With the overall proposed 2011 spending budget projected at $3.834 trillion and cuts this year already at $20 billion, President Barack Obama places job creation at the top of his agenda.
The proposed budget calls for $100 billion toward immediate job creation, a projected deficit at $1.267 trillion, more than $300 billion in tax cuts for the next 10 years for individuals, families and businesses and discretionary spending projected at $1.415 trillion, according to 'The Federal Budget: Fiscal Year 2011' report.
'It's a budget that reflects the serious challenges facing the country,' Obama said in a statement released by the White House. 'We're at war. Our economy has lost seven 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.'
The budget also highlights a small business and wages tax cut to spur hiring and wage increases, extending the Making Work Pay tax credit to 110 million American families for another year and increasing the child care tax break for middle-class families, according to the report.
It also proposes eliminating the tax on capital gains from new investments in small business and extending the American Recovery and Reinvestment Act provision that allows small businesses to expense up to $250,000 of qualified investment through 2010, according to the report.
Deputy Director of the Office of Management and Budget Rob Nabors at a conference call on Monday said with the unemployment rate still soaring, the president is taking action to create a package that will help create more jobs.
'Unemployment is still too high - it's 10 percent,' Nabors said. 'The president has already requested of Congress that they pass a jobs package. We expect to see funding for state fiscal relief for the jobs package, which will hopefully pass soon.'
Plans include building the largest investment in clean energy in history, increasing investment in scientific research and a 6 percent increase in funding for the Department of Education, Obama said.
'This funding is tied to reforms that raise student achievement, inspire students to excel in math and science and turn around failing schools which consign too many young people to a lesser future - because in the 21st century there is no better anti-poverty program than a world-class education,' he said.
Other plans include eliminating a subsidy to banks that lend to college students, Obama said. The money would be used to revitalize community colleges and make college more affordable, with hopes that by 2020 the United States will have the highest proportion of college graduates in the world.
'These are the investments we must make to create jobs and opportunity now and in the future, and in a departure from the way business had been done in Washington, we actually show how we pay for these investments while putting our country on a more fiscally sustainable path,' he said.
But the budget also brings some tough choices, Obama said.
For example, also proposed is a freeze in government spending for three years, which will not apply to benefits received through Social Security, Medicaid or Medicare and national security, including benefits for veterans, but will apply to all other discretionary government programs, he said.
'We're not simply photocopying last year's budget - freezing spending does not mean we won't cut what doesn't work to pay for what does,' Obama said.
It also calls to eliminate tax preferences for oil, gas and coal companies, raising $40 billion over 10 years, according to the report.
'While we extend middle-class tax cuts in this budget, we will not continue costly tax cuts for oil companies, investment fund managers and those making [more than] $250,000 a year,' Obama said. 'We just can't afford it.'
The budget also considers consolidating 38 separate education programs into 11, Obama said.
'Like any business, we're also looking for ways to get more bang for our buck, by promoting innovation and cutting red tape,' he said.
Other steps are aimed toward reining in deficits, Obama said.' He proposed a fee on big banks to pay back taxpayers for the bailout and to reform the way contracts are awarded to save taxpayers billions of dollars.
Obama said the budget comes at a difficult time.
The budget 10 years ago was a surplus of $200 billion, but over the course of the past 10 years, previous administrations and Congresses passed massive tax cuts for the wealthy and funded two wars through borrowing, without actually paying for any of it, he said.
Coupled with a recession and health care costs, the budget only worsened, Obama said.'
'As a result, when I first walked through the door, the deficit stood at $1.3 trillion, with projected deficits of $8 trillion over the next decade,' he said. 'If we had taken office during ordinary times, we would have started bringing down these deficits immediately.'
Obama said despite efforts to create rescue programs, last year the country was losing nearly 700,000 jobs each month, the economy was in a free fall, and the financial system was near collapse, leading others to fear another Great Depression.
'That rescue was not without significant cost - it added to the deficit as well,' he said. 'We have to address the irresponsibility that led to it, and that includes the failure to rein in spending, as well as a reliance on borrowing - from Wall Street to Washington to Main Street - to fuel our growth.'
Rutgers University Democrats President Alex Holodak said Obama had to make some tough choices in terms of the 2011 budget, and a lot of money will be spent, but he is optimistic it would help the economy.
'In order to pull us out of this 'hellip; recession and in order to create jobs, they're going need to spend a lot of money this year,' said Holodak, a School of Arts and Sciences senior. 'I'm cautious on what we're spending our money on, but I think that a lot of is justified.'