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Obama budget wants to create jobs now, target the deficit later

THE NATION

The $3.8-trillion plan calls for more spending on community colleges and job training, and blows past the president's promise to cut the deficit in half. The U.S. 'can't cut our way to growth,' he says.

February 14, 2012|Kathleen Hennessey and Christi Parsons
  • President Obama greets students at a Virginia community college after speaking about his proposed budget.
President Obama greets students at a Virginia community college after… (Win McNamee, Getty Images )

WASHINGTON — President Obama called for more spending on community colleges, job training, infrastructure, and research and development as he touted an election-year budget that seemed to complete his shift in focus from budget cutting to job creation.

Arguing that the country can't "cut our way to growth," Obama delivered a $3.8-trillion budget plan to Congress and blew through a promise to cut the deficit in half by the end of his first term. Obama's budget projects a $1.3-trillion deficit in fiscal year 2012 and $901 billion in 2013, both over the $700 billion that would have made good on his pledge.

A central and controversial feature of the budget is a proposal to ask the wealthy to shoulder more of the burden of paying down the deficit. The 2013 budget counts $1.5 trillion in increased taxes, including the expiration of the George W. Bush-era tax cuts for top earners, increased estate taxes and higher rates on investment income.

Obama sent the document to Capitol Hill along with a message about pushing the economic recovery now and worrying more about deficit reduction down the road.

One way to spur growth is to pour $8 billion into two-year colleges so they can train workers specifically for the industries in their neighborhoods, Obama said.

"At a time when our economy is growing and creating jobs at a faster clip, we've got to do everything in our power to keep this recovery on track," Obama told a crowd Monday at a community college in northern Virginia. "By reducing our deficit in the long term, what that allows us to do is to invest in the things that will help grow our economy right now. We can't cut back on those things that are important for us to grow."

The message, and the budget behind it, showed how far the president has traveled from the dog days of deficit reduction talks last summer. The Democratic president then tried to strike a solution with House Republicans that would cut debt and deficits and trim government programs while increasing taxes on the rich. Having failed to reach a deal, Obama has since called for more spending, not less, to aid the fragile economy.

The budget calls for new investment in highway and bridge construction, school improvement, student aid, manufacturing and research.

Republicans scoffed at the president's broader strategy of job creation through new government spending, complaining that the president's approach ignores the threat that deficits pose to long-term growth. GOP leaders dismissed the budget plan as nothing more than a campaign document.

Top advisors to the president say the budget would put the country on track to make $4 trillion in deficit reductions over the coming 10 years, through trims to government spending and increases in taxes on the wealthy. The budget would cut spending by $2.50 for every dollar it raises in taxes, according to the president's economic team.

The real goal of the blueprint is to win public support for Obama's vision for the country, which will go before voters in the November presidential election. In this politically charged year, neither the White House plan nor its Republican alternative is likely to be approved by Congress.

Republicans said they were suspicious of the accounting, including the way the Obama budget office books the savings from the drawdown of wars in Iraq and Afghanistan. Republicans quickly dismissed the notion that money not spent on the wars should be counted as savings.

"It's a gimmick," House Budget Committee Chairman Paul D. Ryan (R-Wis.) said Monday. "This is money that was never intended to be spent; it was never requested. We shouldn't be counting it as part of our total as if we're accomplishing savings."

The Obama budget counts more than $800 billion in savings from the wars, and reinvests $230 billion in transportation projects, part of the administration's spending aimed at juicing the economy.

Obama is seeking a $476-billion, six-year transportation bill, which, when added to another $50 billion requested for roads and bridges, amounts to an 80% increase over the last such request.

Several Republicans noted the president's budget did not make structural changes to Medicare, a major driver of the nation's mounting debt but a political risk for both parties. Ryan has promised to include a Medicare overhaul in the House budget for a second year, although he is expected to give a modified version of the voucher-style program he proposed last year.

But top advisors to Obama say his budget proposed more trims to entitlements, including Medicare and agricultural subsidies, than that of any recent president. The budget calls for $360 billion in cuts to Medicare and Medicaid over the next 10 years.

kathleen.hennessey@latimes.com

christi.parsons@latimes.com

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