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Archive for Tuesday, January 26, 2010

Obama will ask to freeze part of budget, sources say

January 26, 2010

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— Facing voter anger over mounting budget deficits, President Barack Obama will ask Congress to freeze spending for some domestic programs for three years beginning in 2011, administration officials said Monday. Separately, Obama unveiled plans to help a middle class “under assault” pay its bills, save for retirement and care for kids and aging parents.

The spending freeze would apply to a relatively small portion of the federal budget, affecting a $477 billion pot of money available for domestic agencies whose budgets are approved by Congress each year. Some of those agencies could get increases, others would have to face cuts; such programs got an almost 10 percent increase this year. The federal budget total was $3.5 trillion.

The three-year plan will be part of the budget Obama will submit Feb. 1, senior administration officials said, commenting on condition of anonymity to reveal private details. They said Obama was expected to propose the freeze Wednesday night in his State of the Union address.

The Pentagon, veterans programs, foreign aid and the Homeland Security Department would be exempt from the freeze.

The savings would be small at first, perhaps $10 billion to $15 billion, one official said. But over the coming decade, savings would add up to

$250 billion.

The White House is under considerable pressure to cut deficits — the red ink hit a record $1.4 trillion this year — or at least keep them from growing. Encouraged by last week’s Massachusetts Senate victory, Republicans are hitting hard on the issue, and polls show voters increasingly concerned.

Obama’s separate public comments previewed other topics in the State of the Union address.

The proposals he described won’t create jobs, but he said they could “re-establish some of the security that’s slipped away.” His remarks aimed to lift the nation’s dour mood and show he is in touch with the daily struggles of millions of people as resentment runs high about lost jobs and the economy.

The initiatives amount to a package of tax credits, spending expansions and new mandates on employers to encourage retirement savings by workers. Most of them will be included in Obama’s budget for the fiscal year starting Oct. 1, and they will require approval from Congress. Obama will release that budget Feb. 1.

The president’s latest rollout of ideas served as a preview of his prime-time State of the Union address. The economic elements of that speech will also cover Obama’s plans to boost job creation and reduce swelling budget deficits — areas of concern to the public.

Obama’s address will outline his second-year agenda across a spectrum of issues, including tighter rules on Wall Street behavior and a push for financial discipline in Washington. He also is expected to touch on the controversial issue of gays in the military.

The White House maintained that its imperative still is to create jobs. Unemployment remains in double digits, and the economy is the public’s top concern.

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