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Statement by Robert Greenstein, Executive Director, Center on Budget and Policy Priorities, on the President's 2010 Budget Proposal
Date:2/27/2009

ns permits under the Administration's proposed cap-and-trade system to address global warming, rather than conferring windfall profits on energy companies and others that pollute by giving them tens of billions of dollars' worth of permits for free. The proposal would then use auction proceeds to offset the impact on working families of the resulting increases in energy prices, by extending the Making Work Pay tax cut. (This tax cut is similar to tax-reduction proposals of recent years by a number of analysts, including those here at CBPP, to efficiently provide middle-income consumers with relief from the increased energy costs that an emissions cap would trigger.) Additional measures will be required to provide adequate relief to low-income consumers; the budget envisions using some of the remaining auction proceeds for that.

The budget also makes a significant commitment to restoring fiscal responsibility while meeting high priority national needs, by:

  • Reducing deficits to 3 percent of the Gross Domestic Product by 2013, about the level needed to keep the federal debt from rising much faster than the economy and thus leading to an explosion of debt that swamps the budget and the economy.
  • Pledging to offset the costs over the next ten years of health care reforms that initially will raise costs by providing universal coverage but that will set the stage for reducing public- and private-sector health care costs in subsequent decades by gradually slowing the rate at which those costs grow. The high rate of growth of health-care costs is at the root of the nation's long-term fiscal problem.

By themselves, these budget proposals would prove insufficient to keep deficits at 3 percent of GDP indefinitely. Policymakers will need to take additional steps in subsequent years, as President Obama noted at his "fiscal summit" on Monday.

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SOURCE Center on Budget and Policy Priorities
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