Obama moves budget center

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President Obama presented his nearly $4 trillion budget, proposing to cut more than $1 trillion from Federal programs over the next ten years. Over the next two years it will cut $200 billion. As you recall a little over a month ago, Congress approved $858 billion in tax cuts over the next two years. If one does a little math here by subtracting the $200 billion in proposed spending from the lost revenues of $858 billion in tax cuts, $658 billion of those tax cuts remain uncompensated for in Obama’s budget proposal. In essence, these cuts that Obama is proposing are not putting a dent in the budget because of the giant tax cuts.

In balancing our national budget, Obama and Congress keeps focussing on the wrong side of the equation. The projected deficit in 2011 is $1.65 trillion. The whole non-defense discretionary spending budget in 2010 was $477 billion. If all non-defense discretionary spending was eliminated, there would still remain a deficit over $1.1 trillion. Congress cannot cut its way out of deficits.

Some of the cuts that President Obama is proposing in his budget include $300 million for community block grants, $2.35 billion for low income home energy assistance program (let the poor people freeze to death), and $400 billion in five-year domestic spending freeze. Also pell grants, graduate school loans, community access, etc., were cut. Add all of these up still doesn’t come close to compensating for the recently given tax cuts to the rich. The numbers don’t lie. Congress and the President may lie, but not the numbers. However, Obama and Congress persist in cutting spending, affecting the poor and the middle class, and refusing to hit the rich. Congress refuses to include the rich in sharing the pain of balancing the budget along with the poor and middle class.

Obama agrees with the Republican argument to give tax cuts to the rich to help the economy. But that doesn’t help the economy. Then cut programs for the middle class and the poor to balance the budget. But you can’t balance the budget that way. All he is doing is helping the Republican agenda.

Obama is moving the political spectrum to the right. When Obama does a pre-emptive surrender, offering to cut programs right, extend tax cuts, or reduce estate taxes right from the beginning of any dialogue with the GOP, he moves to the right, since the Republicans don’t respond by moving towards the center to him. Rather than respond in kind and move to the center, they simply continue to move to the right.

America needs tax reform. The last thing Congress needs to do is to extend tax cuts to people who need them the least. Some Democrats want to cut the subsidies to the oil companies: $36 billion over the next ten years. Republicans refuse to cut these subsidies to the oil companies, the richest companies in the world, preferring to cut programs for the poor and middle class.

If the Democrats don’t draw the line and say they are not doing a single cut until the Republicans agree to eliminate the subsidies for the richest companies in the world, they will get rolled over by the Republicans. The White House and Congressional Democrats don’t understand that.

The President’s budget should have been more aggressive in terms of tax justice, in terms of being sensible in the reductions in military spending and the areas of agriculture reform.

About William Brighenti

William Brighenti is a Certified Public Accountant, Certified QuickBooks ProAdvisor, and Certified Business Valuation Analyst. Bill began his career in public accounting in 1979. Since then he has worked at various public accounting firms throughout Connecticut. Bill received a Master of Science in Professional Accounting degree from the University of Hartford, after attending the University of Connecticut and Central Connecticut State University for his Bachelor of Arts and Master of Arts degrees. He subsequently attended Purdue University for doctoral studies in Accounting and Quantitative Methods in Business. Bill has instructed graduate and undergraduate courses in Accounting, Auditing, and other subjects at the University of Hartford, Central Connecticut State University, Hartford State Technical College, and Purdue University. He also taught GMAT and CPA Exam Review Classes at the Stanley H. Kaplan Educational Center and at Person-Wolinsky, and is certified to teach trade-related subjects at Connecticut Vocational Technical Schools. His articles on tax and accounting have been published in several professional journals throughout the country as well as on several accounting websites. William was born and raised in New Britain, Connecticut, and served on the City's Board of Finance and Taxation as well as its City Plan Commission. In addition to the blog, Accounting and Taxes Simplified, Bill writes a blog, "The Barefoot Accountant", for the Accounting Web, a Sift Media publication.
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