The President's Budget: Turning The Ship of State Around

Today's presidential budget proposal [1] if enacted would be the second step, following the new American Recovery and Reinvestment Act, in turning the ship of state away from the cliffs of conservatism and on the path of active progressive government.

At least on the domestic front. The jury is out regarding military matters. And the two are related.

Over the course of the 10-year budget window, President Barack Obama envisions a $634 billion fund for health care reform [2] that would provide coverage for all Americans, paid for by higher taxes on the wealthy and various budget savings -- a dramatic gesture that confirms the deep commitment from the White House to solve the health care crisis.

But as the White House acknowledges and The Treatment's Jonathan Cohn observes [3], $634 billion is but a healthy down payment. More will be needed.

On energy and climate, I wrote yesterday about the stunning news that the White House expects to have revenue from a carbon cap and emissions trading system to combat global warming [4] and transition to a clean energy economy.

That means President Obama plans to make polluters pay for the right to pollute public sky with carbon, which is the only way a "cap-and-trade" can be effective, but shows the White House is prepared to fight the fossil fuel industries to do what's effective.

Such a plan would raise significant revenue, particularly in the early years of the plan while the carbon cap would be looser (it would gradually tighten over time). However, the White House understandably wants to return the vast majority of revenue from polluters to consumers [5], to reduce the impact of short-term price spikes and refute charges that the plan amounts to a tax hike,

But that means the White House only expects to use $15 billion a year to invest in clean energy [5]. The Apollo Alliance concludes we need to invest $50 billion a year for 10 years [6] to transition to a clean energy economy. Again, a good down payment, but not all we need.

(UPDATE 9:15 PM ET: Earlier today, I participated on a conference call with Obama administration environmental officials, who clarified that the $15 billion mentioned above would be in addition to current funding for clean energy, but did not have readily available what the final total would then be.)

Which brings us to the military budget.

It would not make sense to raid the military budget simply to pay for other needs, if it meant recklessly weakening our defenses. But it so happens there is signifcant waste in the military budget that can be rooted out which would strengthen our defenses, and needs to be rooted out to pay for solving our myriad of crises.

Congressman Barney Frank argues we can and should cut [7] our $670 billion military budget [8]by 25 percent. [7] That includes spending for our wars in Iraq and Afghanistan.

Disregarding the President's budgeting for Iraq and Afghanistan (because I don't believe we can discern too much on his strategy from the budget numbers), Obama's basic defense budget is scheduled for a slight increase in 2009: [9] from $513 billion to $534 billion.

Yet citing a recent report from the Institute for Policy Studies, Rep. Frank finds we can save $60 billion a year in wasteful defense spending. [10] That would go a long way to helping fund our pressing health care and energy needs. Not all the way, but it would be extremely hard to get to where we need to be without it.

Now, according to the Wall Street Journal, that slight increase in the president's budget may actually lead to some of those cuts: [9]

The Pentagon's base budget and wartime spending would rise about 1.4% in fiscal 2010 from 2009, a modest increase that signals the Obama administration's first attempts to rein in national security spending.

President Barack Obama has talked about the need to prune some high-end Pentagon acquisitions programs and withdraw most U.S. combat troops from Iraq by mid-2010, both of which should result in significant defense-spending reductions. But the president plans to direct additional financial and military resources into Afghanistan, so much of the savings may be offset by new spending on the troubled war effort there.

That could force the military to cut back its spending on its most-advanced weapons, and the Pentagon plans to overhaul its weapons-purchasing system.

On one hand, there is new pressure to cut waste. On the other, the extremely challenging problem of Afghanistan looms large, and getting it wrong will be costly.

Is the President ready to cut even more military waste? And will he devise a smart Afghanistan strategy that will reduce the terrorist threat and not sink us in another quagmire, which would prevent us from recouping further military budget savings?

Big questions, not answered by this budget, which will demand our vigilance.