The Obama administration will release a federal budget today for the fiscal year beginning October 1 that cuts the total federal deficit by as much as $1.1 trillion over the next decade, two thirds of it through cuts in domestic spending, according to press reports over the weekend.
Among the social programs to be gutted are Pell Grants for working-class college students and the LIHEAP program, which provides heating assistance for low-income families and the elderly. (See “Obama to slash home heating assistance for low-income families and seniors”.)
According to the Associated Press, “An administration official says President Barack Obama is proposing to cut $100 billion over a decade from the Pell Grant program through belt-tightening, but use the savings to keep the maximum college financial aid award at $5,550.”....
The total deficit reduction is more than double the $400 billion Obama proposed last month to save by freezing domestic discretionary spending at the 2010 level for the next five years. About $300 billion is to come from tax increases, leaving another $400 billion to come from reductions in spending below the 2010 level......
The gargantuan Pentagon budget would face only a minor trim—$78 billion over ten years, or barely one percent of the cumulative trillions in military spending envisioned over that period. Even this cutback is based on the shaky assumptions that a complete US military withdrawal from Iraq will take place by December 31, 2011, and that US troop strength in Afghanistan will decline from present levels.
The Obama budget will propose $62 billion cuts in federal health spending over ten years to offset the cost of increasing Medicare reimbursement payments to doctors by the same amount. The only significant tax increase, a limit on the value of itemized deductions for wealthy households, is intended to offset the cost of adjusting the Alternative Minimum Tax to prevent it from hitting taxpayers in the $150,000 to $250,000 bracket—a benefit for the more well-off sections of the middle class, not hard-pressed working-class families.......
The budget for the Environmental Protection Agency would be slashed by a staggering 30 percent. Other cuts include:
· The Women, Infants and Children program, providing milk and other food for low-income pregnant women, mothers and young children, cut $758 million, about 10 percent
· Head Start preschool education, cut $1.1 billion, about 14 percent
· Community health centers, cut $1 billion
· The District of Columbia budget, cut $240 million, mainly from the Metro system.
There are moves in both the House and Senate to pass the 2011 Defense Appropriations Bill intact, which would effectively exempt the military budget from any cuts in the revised continuing resolution....
Discussions are under way between the Obama White House and House Republican leaders. On February 9, Obama, Vice President Joseph Biden and chief of staff William Daley held a closed-door meeting with the three top Republicans, Speaker John Boehner, Majority Leader Eric Cantor and Majority Whip Kevin McCarthy, to discuss budget and regulatory issues, among others, without aides present.
The talks were conducted in the wake of a report by the Congressional Budget Office estimating that the federal deficit for the current fiscal year will grow to $1.48 trillion, up from $1.3 trillion in fiscal year 2010. For the following year, the CBO projects a deficit of $1.1 trillion. All these figures are indicators of financial bankruptcy, with the government deficit approaching 10 percent of US GDP in the current year, a level comparable to Greece.