Republicans criticise Obama's massive $3.5tn budget

Party leaders expressed anger as the US president's budget headed to Congress

Ewen MacAskill in Washington guardian.co.uk,
Thursday 26 February 2009 19.12 GMT



Barack Obama unveils the 2010 budget in Washington. The proposal projects a $1.75tn deficit. Photograph: Jim Watson/AFP/Getty Images

President Barack Obama embarked on the biggest redistribution of wealth from the rich to the poor in US history today when he unveiled his first budget which will amount to a staggering $3.5tn (£2.4tn).

Raising fears among Republicans that he could turn out to be one of the most liberal presidents ever, Obama proposed $1tn in tax rises over the next decade.

But his budget, sent to Congress today, will face enormous resistance from Republicans, who expressed anger at the scale of the spending and tax increases.

The budget amounts to a huge gamble by Obama that, if it goes wrong, could leave the US economy limping badly for years and losing ground to competitors.

The figures in the budget are on a scale that would have been almost unimaginable a year ago. One of the biggest expenditures is $634bn to be directed towards fulfilling Obama's campaign pledge to make a start on providing universal healthcare.

Obama, speaking at the White House before the budget was released, said, that in spite of recession, it was time to address the fundamental problems facing America. "There are times when you can afford to redecorate your house and there are times when you have to focus on rebuilding its foundation."

This meant, he said, "some hard choices" lay ahead. To try to pay for his ambitious spending plans, he intends to rip into Pentagon spending, with expensive projects such as the F-22 fighter jet at risk.

Also to be targeted are farm subsidies that have existed for decades and tax-breaks for corporation.

But the most contentious issue is his planned increase in taxes for anyone earning more than $250,000 a year from 2011.

The president faces a marathon battle with Republicans, who are committed to limited government and lower taxes. Mitch McConnell, leader of the Republicans in the Senate, said: "I have serious concerns with this budget, which demands hardworking American families and job creators turn over more of their hard-earned money to the government to pay for unprecedented spending increases."

One of the more staggering figures to emerge from the budget is that the US deficit for this year is set to rise from an already huge $1.2tn inherited from President George Bush to $1.75bn, much higher than had been anticipated. The total deficit for the next decade is predicted to top out at around $9bn.

In spite of this, the Obama administration insisted it could begin to reduce the deficit next year, based on assumptions that the economy will start to recover by then.

Obama's chief economic adviser, Christina Romer, said she expected the recession to bottom out this summer and that GDP will grow by 3.2% next year but that unemployment, predicted to top out at 8%, would only come down slightly.

The president managed to get his economic stimulus package, aimed at helping the US out of recession, through Congress in near record time, just over a month, but his budget will face repeated delaying action by Republicans.

Although the Democrats enjoy an overwhelming majority in the House, they are dependent on winning over a handful of Republicans in the Senate.

John Boehner, the Republican leader in the House, said: "Everyone agrees that all Americans deserve access to affordable healthcare, but is increasing taxes during an economic recession, especially on small businesses, the right way to accomplish that goal?" His colleague, Eric Cantor, the Republican whip in the House, described the budget as misguided and dangerous.

The Democrats, many of them as liberal as Obama, will want to see as much of the budget get through Congress as possible but will have to make some concessions to try to woo moderate Republicans.

Obama claimed budgets under Bush involved "dishonest accounting" because they had not included the costs of the wars in Iraq and Afghanistan but his does. The budget projects the cost of the wars this year will be $141bn.

http://www.guardian.co.uk/world/2009/fe ... rack-obama