Associated Press
WASHINGTON -- President Barack Obama's new budget sets two major goals: creating jobs and cutting the deficit. But his own budget documents cast serious doubt on whether he'll make much headway on either.
Unemployment will still be near 10 percent by year's end, the administration forecasts.
And any deficit-cutting strides will be modest in light of the administration's intention to spend heavily on jobs, education and other high-priority recession relief programs while shielding the Pentagon, homeland security, veterans, Social Security and Medicare from a proposed spending freeze.
"It's time to save what we can, spend what we must and live within our means once again," Obama said Monday as he unveiled his $3.8 trillion blueprint for the budget year that begins Oct. 1.
In hard economic times, it's hard for the government to simultaneously create jobs and reduce deficits. In this politically charged midterm election atmosphere, it may be next to impossible.
Obama vows repeatedly to get Americans back to work. But deep in the administration's thousands of pages of budget documents is its forecast for 9.8 percent unemployment by the end of this year -- down only slightly from the current 10 percent.
The administration is predicting 8.9 percent unemployment at the end of 2011 and 7.9 percent by the end of 2012 -- rates still deemed to be at recessionary levels. And that's assuming all the jobs proposals included in Obama's budget are adopted by Congress -- a big assumption.
Even as the president submitted his budget to Congress, arrows were flying -- from both sides of the partisan aisle and from special interest groups.
"None of this is easy," White House Budget Director Peter Orszag acknowledged.
Obama's proposal for a three-year freeze on some government domestic spending drew criticism from some on the left who saw favored programs coming under assault.
Republicans, newly emboldened by a Senate victory in Massachusetts last month, were criticizing other parts of the plan, with some complaining of tax increases on wealthy individuals, banks and some corporations while others suggested Obama's deficit-trimming features did not go far enough.
"We can do much better than that," asserted House Minority Leader John Boehner of Ohio.
Obama used his fiscal 2011 budget presentation to underscore his shift in priorities away from health care to job creation, a nod to the economic restlessness among the populace and the changed political dynamics that could signal trouble ahead for Democrats.
Asked whether creating jobs has a higher priority than reducing the deficit, White House spokesman Robert Gibbs said, "In the short term, absolutely."
In fact, many of the administration's deficit-reduction proposals would not come into play right away.
Most economists say the deepest recession since the 1930s probably ended last summer, but they also note that high unemployment rates often linger long after.
Lawrence Summers, Obama's chief economic adviser, said that means the country is in "a statistical recovery and a human recession."
Lackluster housing demand, tight credit, high consumer debt burdens and lower tax revenues for state and local governments are combining with high joblessness in weighing down the recovery.
Doesn't the administration's prediction that unemployment will continue at near 10 percent through the end of the year run counter to the president's promise of putting Americans back to work?
"Our projections of the unemployment rate reflect the particularly severe toll that this recession has taken on the labor market and on American workers," said Christina Romer, who heads Obama's Council of Economic Advisers.
She also noted it was in line with private forecasts.
The administration last year was overly optimistic, predicting last February that the jobless rate -- then 7.6 percent -- would be held at below 8 percent if Congress approved Obama's $787 billion stimulus package. Congress did, and unemployment still soared.
Presidential budgets tend to be like Kabuki dances, the highly stylized Japanese stage plays where the outcome is known well beforehand.
The president proposes and the Congress disposes, a maxim that is seldom truer than in this midterm year. Democrats are under severe pressure and Republicans, eyeing congressional gains in November, are defiant with little incentive to cooperate with the majority.
It is Congress, and not the president, that sets spending and taxing levels. All the president can do is send up a budget blueprint and make it sound like his proposals are the final word. They aren't, not by a long shot. Presidents can always veto what they don't like, but that's at the very end of the long legislative budget road.
Tom Raum covers economics and politics for The Associated Press.
