Obama will have to justify a budget deficit like no other

Obama will have to justify a budget deficit like no other

In his first budget, President Barack Obama essentially threw down the gauntlet. These, he says, are not ordinary times and they call for extraordinary responses.

Certainly a proposed $3.55 trillion budget that includes a $1.75 trillion deficit for the president’s first fiscal year is extraordinary.

If Republicans expected the president to respond to their refusal to support his stimulus package to produce a chastened Obama who would present them with a conciliatory budget, they miscalculated.

Obama charged ahead with a budget that includes tax hikes in top ranges and taking the first steps toward a 10 year plan to establish universal health care.

A $1.75 trillion deficit is an alarming figure, no matter which way it is viewed. Give the president credit for bringing some transparency to the process by including the cost of the war in Iraq and Afghanistan in the budget figures, but he’s still got a lot of explaining to do to the American people about where his budgets will lead the nation.

The past as prologue

Extending his economic policies out 10 years, Obama says the nation will be able to start paying off some of its debt. That’s encouraging, but presidents have come to use the 10-year projections to calm jittery nerves, and little more. President George W. Bush gave the nation a 10-year projection that called for $2 trillion in surpluses at the end of the decade. Instead, after eight years in office the national debt ballooned from $5.7 trillion to almost $11 trillion. Add a reasonable expectation of deficits from the first two years of the Obama administration, and the national debt will be approaching $14 trillion.

And even as President Bush’s rosy economic scenarios were subject to scrutiny, so are President Obama’s. His projection of a 1.2 percent drop in the GDP in 2009 is realistic, but the assumption that the economy will rebound with growth of 3.2 percent in 2010 and 4 percent in the next three years is beyond anything economists are seeing these days.

And if those targets aren’t met, the budget deficits in succeeding years can only grow.

There is no doubt the president inherited an already huge debt, a budget deficit that now includes hundreds of billions of dollars in end-of-year bail-out expenditures that the previous administration did not anticipate and an economy that was racing backward.

Republicans are obliged to question portions of Obama’s proposal, and those few Republicans who attempted to rein in the irresponsible additions to the debt during the Bush years have some moral authority to maintain a hard line.

But the administration and most Democrats and Republicans in Congress are going to have to recognized that while these extraordinary times call for extraordinary action, there is a need for fiscal discipline and room for compromise.