As Obama had pledged, the budget no longer hides the cost of the two wars being fought overseas. Nor does it pretend that the federal government is finished pouring money into the financial system. That's not to say it's a model of realistic accounting. As all presidential budgets are prone to do, Obama's relies on rosier economic projections than most forecasters use. It also maintains the practice of offsetting the deficit with money reserved for future retirees. As a result, its estimates for future revenue and deficits are optimistic, even quixotic.
Accepting the administration's numbers, the budget shows the deficit being cut in half by the end of Obama's current term. But having narrowed the fiscal gap as far as he promised, the president proposes to go no further. Instead, the deficit is projected to rise steadily as the economy grows, instead of shrinking as it did in the 1990s. That's true in part because the administration doesn't predict any savings in fast-growing Medicaid, Medicare or retirement costs, despite its ambition to rein in healthcare costs and shore up Social Security. But another important factor is the additional benefits, tax cuts and domestic programs that Obama wants to fund, which eat into the savings he proposes to achieve through tax hikes and benefit reductions.
Obama makes no bones about it -- his immediate goal is not just to stimulate the economy but to change its priorities. For example, he proposes to raise more than $950 billion over 10 years by rolling back President Bush's tax cuts for the wealthiest Americans, then give $770 billion of that to low- and middle-income taxpayers through lower rates and higher credits. He would cut billions of dollars in subsidies for farms and private student-loan providers, but more than offset those savings by spending more on college loans, worker retraining, nutrition, health and housing programs. If not for $1.5 trillion in projected savings on the wars and nearly $650 billion in new levies on emissions, Obama's proposal wouldn't make a dent in the deficit. And even with those controversial elements, his budget still leaves half of the deficit-cutting job undone.