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Obama’s $3.7 Trillion Budget Calls for Military Spending Increases and Deep Cuts to Social Service Programs

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President Obama has unveiled a budget plan seeking to trim the federal deficit by cutting or eliminating some 200 federal programs, many dedicated to social services and education, while increasing military spending and funding for the construction of nuclear power plants. Announcing his $3.7 trillion proposal, Obama touted his previously stated pledge to freeze funding for domestic programs outside of the military for five years. Obama’s plan includes two modest tax hikes for banks and oil companies. It also calls for ending the Bush-era tax cuts for the wealthiest Americans in 2013 and returning the estate tax to its higher 2009 levels. For analysis of Obama’s proposed budget, we are joined by John Nichols, Washington correspondent for The Nation magazine. [includes rush transcript]

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StoryJan 26, 2011Obama Calls for Spending Freeze, Lowering Corporate Taxes in State of the Union
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: President Obama has unveiled a budget plan seeking to trim the federal deficit by cutting or eliminating over 200 federal programs, many dedicated to social services and education. The $3.7 [trillion] proposal would cut funding in half for the Low Income Home Energy Assistance Program, which subsidizes heating costs for low-income Americans. It also calls for cutting $300 million from community development block grants and limiting an expansion of the Pell grant program for low-income college students.

Announcing the proposal, Obama touted his previously stated pledge to freeze funding for domestic programs outside of the military for five years.

PRESIDENT BARACK OBAMA: As a start, I’ve called for a freeze on annual domestic spending over the next five years. This freeze would cut the deficit by more than $400 billion over the next decade, bringing this kind of spending — domestic discretionary spending — to its lowest share of our economy since Dwight Eisenhower was president. Let me repeat that. Because of our budget, this share of spending will be at its lowest level since Dwight Eisenhower was president. That level of spending is lower than it was under the last three administrations, and it will be lower than it was under Ronald Reagan. Now, some of the savings will come through less waste and more efficiency.

AMY GOODMAN: Obama’s plan includes two modest tax hikes for banks and oil companies. It also calls for ending the Bush-era tax cuts for the wealthiest Americans in 2013 and returning the estate tax to its higher 2009 levels. But it comes less than two months after Obama signed into law a measure that temporarily extended the tax cuts and reduced the estate tax, adding over $500 billion to the federal deficit. According to the White House, the deficit will reach a record $1.6 trillion next year.

The Pentagon meanwhile will see its first spending reduction since the 9/11 attacks, but only at modest levels. The budget allots $553 billion for the Pentagon’s regular spending — $12 billion less than what the military expected, but still three percent higher over fiscal year 2011. Another $118 billion is earmarked for war-time spending.

For analysis of Obama’s proposed budget, I’m joined now by John Nichols, the Washington correspondent for The Nation magazine. He’s joining us from Madison, Wisconsin.

John, welcome to Democracy Now! What stands out for you about the proposed budget?

JOHN NICHOLS: An awful lot does, Amy. I’m pretty disappointed in it. The Catholic Church has always said that budgets are moral documents and that a budget tells us what a government, what a political entity, deems to be most important. And the unsettling thing to me about this budget is that a Democratic president is proposing an expansion of military spending — a substantial expansion of military spending. He’s also proposing to dramatically increase the amount of U.S. government support for the building of nuclear power plants, for all sorts of initiatives that we thought had been settled, old issues.

At the same time, there are dramatic cuts in humanitarian programs and, well, in programs that we think of as basic social services. The LIHEAP program, which is Low Income Heating [Home Energy] Assistance, really, really vital program for people in the northern tier of the United States, is going to take an absolutely dramatic cut. And that cut’s important, Amy, because that’s going to have to be made up someplace, and if the federal government is not funding it, that money is going to have to come from state, county and municipal governments that are already incredibly hard hit. So it’s a brutal attack, frankly. Also, I think the messing with the Pell grants —

AMY GOODMAN: Let me go to — John, let me go to the White House budget director Jacob Lew, who detailed the budget proposal Monday in Washington. Boston Globe reporter Donovan Slack questioned Lew about the 50 percent cut to the Low Income Home Energy Assistance Program.

DONOVAN SLACK: What would the President say to a low-income elderly person in Massachusetts who can’t afford to pay their heating bill? Why are you investing in wireless and not helping her pay her bill?

JACOB LEW: You’re asking why we make a reduction in the Low Income Home Energy Assistance Program. And I have to tell you, this is a very hard cut. This is a cut that has real impact. It’s a program that’s done an enormous amount of good for an enormous number of people. It was never meant to be an entitlement program. It was meant to be a grant program that the states administered. Its funding level has fluctuated based on needs. Balancing our fiscal challenges and the funding change from 2008 to now, we made the tough decision. And, you know, we have said in our documents in the budget that, you know, we will keep our eye on where prices go and what need in the future is, but we can’t just kind of cruise at a historic high spending level when we’re trying to make these very difficult savings.

AMY GOODMAN: That was Jacob Lew. Your response, John?

JOHN NICHOLS: Well, I grew up in a cold climate. As a kid, I used to walk to school in 20-below-zero weather. And you knew the kids who came from homes that were low income, that were struggling to pay those bills. And the LIHEAP program is not some sort of, you know, easy-going benefit that the government throws out if it’s got a little extra money. It’s life and death. This is something that decides whether people can heat their homes in frigid climates. It’s also something that really decides whether communities can maintain their services. Remember, we’re talking about places that don’t have a choice on whether you’re going to use home heating oil, whether you’re going to use heating oil to heat your schools and your community centers. You have to do it. And so, for the Obama administration to go here, I think, is a very bad signal.

And frankly, I think it’s hugely cynical, because I think the President and his people believe that this is one issue where the Congress will feel forced to find the money. So, instead of the White House making the tough choices, you see a situation where they’re punting it over. I find it very disappointing, as I do an awfully lot of the social service and education cuts in this budget. They seem to be designed to send symbolic messages about some notion that the President is willing to make cuts rather than doing the right thing, which is to say there are some programs that we simply will not cut, because they’re life-and-death programs, and they’re also essential programs to a civil society.

AMY GOODMAN: And how would you compare the cuts to the more than 200 federal programs involving social services and education to what we’re seeing at the Pentagon?

JOHN NICHOLS: Well, it’s just horrifying, Amy. You know, one of the most frustrating things is how our media covers budgets. And it is, frankly, a repetition of spin. And so, so much of the media reported yesterday that the White House was proposing $70 to $80 billion worth of cuts in Pentagon spending. What that really is is Secretary Gates saying, “Here are some things that we don’t think we need.” At the end of the day, however, there are not cuts in military spending. This is an expansion of Pentagon spending at a dramatic level, three to five percent, depending on how you measure it.

And the important thing is, here you have President Obama saying that they’ve gotten down to the lowest level of domestic spending, domestic discretionary spending, since the Eisenhower era. That certainly sounds good as a sound bite, but understand what that means. It means that now Pentagon spending, defense spending, is a dramatically higher level of what our budget goes to. And I wish President Obama would remember what Dwight Eisenhower said about defense spending versus domestic spending. Dwight Eisenhower said, every time you buy a bomb, every time you pay for a bullet, that’s money that comes out of building a school or putting a roof on a house. I just think the President is making a lot of wrong choices here.

AMY GOODMAN: We’re going to go to break. When we come back, we’re going to stay with John, and we’ll be joined by a Wisconsin teacher. A quite remarkable speech by the Republican Governor Scott Walker of Wisconsin, who is threatening to call out the National Guard if there’s any unrest. He has unveiled a plan to strip state employees of their right to collective bargaining. This is Democracy Now!,, The War and Peace Report. Back in a minute.

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