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The Obama budget’s big ambitions

The plan, projecting a $1.7 trillion deficit, includes a down payment on universal healthcare.

By Staff writer / February 26, 2009

Ready to talk: President Obama went to the Eisenhower Executive Office Building on the White House campus Thursday to discuss his proposed federal budget for fiscal year 2010.

Charles Dharapak/AP

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Washington

With his first proposed budget, President Obama is attempting to address some of the most difficult public-policy problems facing the United States.

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He promised change, after all, and that’s what he may be trying to deliver.

From a down payment on universal healthcare to a proposed system of selling pollution permits to higher taxes on the wealthy, Mr. Obama’s fiscal 2010 budget outline contains a number of items that, if adopted, would represent major shifts in the direction of the federal government.

Congress is already reeling from the costs and effort of trying to revive the economy.

Obama’s budget is likely to lead to even fiercer debate about national spending and tax priorities.

But given last November’s election results, perhaps lawmakers should have seen these proposals coming.

“You would expect this in the first budget of the first year of a new administration,” says Stan Collender, a longtime Congressional budget staffer who is now managing director at Qorvis Communications. “If you didn’t get it, by itself that would have been a shock.”

If nothing else, the eye-popping numbers contained in the budget outline provide some context for the Obama administration’s recent focus on the need for US fiscal responsibility.

For the current fiscal year, the deficit will hover around $1.75 trillion, according to budget figures.

That figure equals about 12.3 percent of Gross Domestic Product, making it the highest deficit as a share of the economy since World War II. By way of comparison, the deficit for 2008 was $455 billion.

Accounting for the wars

The Obama administration inherited a $1 trillion deficit for 2009, due to the softening economy and the Bush administration’s financial bailout efforts.

The just-passed stimulus bill, plus additional financial rescue money, push that figure to the $1.7 trillion mark.

Administration officials point out that their new budget includes the expected cost of the war in Iraq, plus some other expenses that the Bush administration had not accounted for in its annual budget submissions.

“All told, we are showing $2.7 trillion in costs in this budget that were excluded from previous budgets, and I think that is a mark of the honesty and responsibility contained in this document,” said Office of Management and Budget director Peter Orszag in a budget briefing for reporters.

In 2010, the US government will spend a total of $3.5 trillion, according to the new budget outline. Between 2010 and 2014, the total spending figure will be $18.7 trillion, it projects.

Tackling healthcare

Among its major proposed changes is a 10-year, $634 billion reserve fund intended to eventually pay for the administration’s proposed expansions in national health care coverage.

Half of the reserve fund would come from new revenue. The other half would come from changes in the current system, such as assumed savings garnered by requiring competitive bidding in some areas of Medicare.

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