–Obama Offers FY’13 Budget That Claims $3T In Ten Year Savings
–Republicans Scorch Plan As Heavy With Gimmicks, Light on Reform
–Democrats Say Budget Moves Country in Right Fiscal Direction
–Budget Experts Say Plan Is Modest Step Forward

By John Shaw

WASHINGTON (MNI) – Since President Obama released his fiscal year
2013 budget Monday, congressional panels and budget experts have many
spent hours drilling down into its details and rendering judgements
about its merits.

Not surprisingly, congressional Democrats have concluded its a
basically sound plan that attempts to both control deficits and spur
economic growth and job creation.

Congressional Republicans, on the other hand, have decided the plan
is little more than a house of mirrors which is heavy on fiscal gimmicks
and light on fiscal reforms.

Independent budget experts are coming to more nuanced judgements
about the president’s budget, identifying areas of real progress and
missed opportunities.

Obama said his plan would secure about $3 trillion in deficit
reduction over ten years.

Obama’s budget calls for $1.5 trillion in additional revenues, with
higher taxes proposed on some corporations, upper income earners and
hedge funds. Much of this additional revenue will come from allowing
many of the Bush era tax cuts to expire at the end of the year for those
with annual incomes of more than $250,000.

The president’s fiscal outline calls for about $350 billion in
short-term stimulus measures, with about half of this coming from a
year-long extension of the payroll tax cut and unemployment insurance
benefits.

The Obama budget calls for about $580 billion in entitlement
savings from programs such as Medicare, Medicaid, and agriculture
subsidies.

The budget projects a $1.33 trillion deficit for FY’12, the current
fiscal year. This is slightly above the actual FY’11 deficit of $1.296
trillion.

For FY’13, the president’s budget would spend about $3.8 trillion
and take in about $2.9 trillion of revenues, thus leading to a deficit
of about $900 billion. The budget sees deficits of $668 billion in FY’14
and $610 billion in FY’15

“This plan appears to be something of a Rorschach test, with even
non-partisan analysts emphasizing different elements and drawing
different conclusions. Interpreting Obama’s budget depends a lot on
which proposals and projections you emphasize,” Bob Bixby, executive
director of the Concord Coalition, said in report of the budget.

Bixby said the budget deserves praise for making it clear that
future deficit reduction can not be accomplished by continuing cuts in
discretionary spending which is the smallest component of the federal
budget and the area that was the target of all the deficit cutting
efforts in 2011.

But Bixby said Obama’s budget falls short on entitlement reforms.

“Obama’s budget calls for some positive changes in entitlement
spending but they fall far short of the sweeping reforms that will be
needed to deal with the growing pressures on the federal government as
the population ages and health costs continue to rise,” Bixby said.

A study on the Obama budget by the Center for a Responsible Federal
Budget offers a mixed assessment of the plan. It says that under Obama’s
plan, the deficit would fall from 8.5% of gross domestic product in
2012, to 5.5% in 2013, to 3% in 2017, to about 2.8% between 2018 and
2022.

“The President’s budget takes an important step in laying out a
number of policies to stabilize the debt,” it says.

“Given how serious the nation’s fiscal challenges are, however, the
President should have laid out a specific comprehensive plan to return
the nation to a sustainable fiscal path, rather than just a first step,”
it adds.

While lawmakers continue to go over the president’s budget, the
House and Senate Budget Committees are charged to draft congressional
budget resolutions this spring. These are congressional fiscal
blueprints that set spending and revenue goals and make deficit
estimates.

Budget law requires that a congressional budget resolution be
passed by mid-April. House Budget Committee Chairman Paul Ryan has said
he will present a plan next month in the House. It remains unclear if
Senate Budget Committee Chairman Kent Conrad will offer a draft
resolution this year for the Senate to consider.

Former Senate Budget Committee Chairman Pete Domenici and former
White House budget director Alice Rivlin wrote in an essay this week
that Obama’s budget “is a credible opening bid in what could be a
constructive negotiation.”

“Many will say that we are naive to expect Congress and the
president to negotiate seriously during a year in which control of the
House, Senate and the White House are at stake,” they said.

But they added that the “seriousness of the pending fiscal crisis,”
demands action this year and urged congressional panels to develop plans
to promote short-term growth and long-term deficit reduction.

** Market News International Washington Bureau: (202) 371-2121 **

[TOPICS: M$U$$$,MFU$$$,MCU$$$]