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Speaking at the commencement ceremonies of Southern New Hampshire University in May 2007, then-Sen. Barack Obama expounded on the subject of deficits. “There’s a lot of talk in this country about the federal deficit,” he said. “But I think we should talk more about our empathy deficit—the ability to put ourselves in someone else’s shoes; to see the world through those who are different from us.”
He better hope for some of that empathy today. Obama’s budget blueprint, released this morning, projects a gargantuan $1.75 trillion budget deficit for this fiscal year as the government continues to pour money into the financial system. The ‘Meter knows it can’t have it both ways—efforts to rescue the economy cost money—but the budget picture is a clear reminder that Obama’s promise to restore fiscal responsibility is a long way from being fulfilled. That said, the budget looks a lot different from fiscal years of yore. The Change-o-Meter rests at 45 points.
To put that $1.75 trillion figure in perspective, the amount equals 12 percent of the U.S. GDP, the highest share since the end of World War II. An additional $250 billion is allocated for bank bailouts.
Let’s have a look at where policy changes can be found in this budget request:
• In health care, Obama proposes a $634 billion “reserve fund” that would begin to finance a major extension in health insurance to millions of people, one of his central campaign planks: 25 points.
• To help feed that fund, the budget would reduce the itemized deductions available to high-income families in a basic wealth-redistribution measure. It would also put an end to government subsidies for insurers that sell Medicare plans: 20 points.
• The budget includes a promised greenhouse-gas cap-and-trade system that would begin generating revenue by 2012 and would curb emissions and steer resources toward renewable energy: 15 points.
• Scientists are pleased over a flush of new funding for basic research: 5 points.
• Large-scale farmers who receive direct subsidies would get less cash from the government: 5 points.
We’re docking 25 points for the soaring deficit. Let’s also recall that Congress has some say in all this. Immediate reaction from Republicans was not enthusiastic, as one might expect. Obama can look forward to bitter fights as his budget—the finer details of which are still forthcoming—slouches its way through the House and Senate.
There’s a lot to cover, so we want to hear your thoughts on what the Change-o-Meter should be taking into account. No detail is too small or wonky. E-mail may be quoted by name unless the writer stipulates otherwise.