13th annual Municipal Finance Conference


13th annual Municipal Finance Conference



On the President’s Budget for Fiscal Year 2012

Bill Frenzel
Bill Frenzel
Bill Frenzel Former Brookings Expert

February 16, 2011

President Obama sent the country a Valentine Monday. But while the budget may have been concocted with love, in it there is only a touch of sweet and a lot of bitter for all.

For the liberal core constituencies, the sugary “investments” will not overcome the bitterness of the freezes and reductions. Yes, the budget has goodies for the states (unemployment compensation), promotes high-speed rail, and boosts education and environmental policy. But, no, it does not cut defense sharply enough, nor defend favorite domestic discretionary programs, like LIHEAP.

For conservative budget hawks, the cuts and freezes provided aren’t sweet enough. The investments tasted like the bitter gall of more profligate spending.

For the American people, the mailbox was empty on Valentine’s Day. Both the president and the Congress are engaging in a laudable effort to act responsibly on domestic discretionary spending – which accounts for one-sixth of the budget. Of course, that leaves the other five-sixths mostly untouched. The projected deficit remains above $1 trillion.

The heavy end of the budget – entitlements, defense, and tax expenditures – have largely been ignored by both branches. Our debt-to-GDP ratio, already dangerously high, is not reduced under either the administration or the congressional (House) budget scenarios.

With neither the president nor the House willing to lead off first base, something has to get them moving. The President’s Fiscal Commission could have done it. It didn’t. Another game-changing stratagem is needed.

It is good that the president and House leadership are talking, but the time for idle chatter and sweet nothings is over. They need to talk turkey. Serious budget work should begin now toward a thorough fiscal overhaul by Thanksgiving.