Obama's Budget to `Cut What We Can't Afford,' Lew Writes in New York Times

President Barack Obama will send Congress a “tough choices” budget next week that would cut some of his own programs in the environment, community development and services for the poor to rein in the deficit, White House budget director Jacob Lew said.

“Make no mistake: this will not be easy,” Lew wrote in an op-ed piece published in yesterday’s New York Times. “We have to cut what we cannot afford.”

The budget for fiscal 2012 that goes to Congress on Feb. 14 would cut $350 million from the community services program under the Department of Health and Human Services; $125 million from the Great Lakes Restoration Initiative under the Environmental Protection Agency and $300 million from the Community Development Block Grant program under the Department of Housing and Urban Development, Lew said.

The total savings of $775 million in these three programs represent a small fraction of a budget whose deficit is likely to exceed $1 trillion, according to the nonpartisan Congressional Budget Office. The fiscal year begins Oct. 1.

“We had to choose programs that, absent the fiscal situation, we would not cut,” Lew wrote. “It will require tough choices since every decision to invest in one program will necessitate a cut somewhere else.”

‘Sparrow Belch’

Former Wyoming Senator Alan Simpson, co-chairman of the White House Commission on Fiscal Responsibility and Reform and a Republican, said on CNN’s “State of the Union” program yesterday that promises to cut earmarks, waste, fraud and abuse and foreign aid are “sparrow belch in the midst of the typhoon.”

Congressional Republicans are wrestling with their own spending cuts promised in the November elections. Simpson said on CNN that Republican proposals to revert to 2008 spending levels would result in “peanuts” in savings. This year’s budget is projected to end with a record $1.5 trillion deficit, the CBO said Jan. 26.

Still, Obama’s cuts in the budget for 2012 are likely to spark opposition from environmentalists, mayors and advocacy groups for the poor.

The three examples cited by Lew are part of Obama’s call for a five-year freeze on discretionary spending outside of national security, for a savings of more than $400 billion over the next decade. Discretionary spending is money approved by Congress each year and accounts for a little more than 10 percent of the federal budget, Lew said.

Mandatory spending including Social Security, Medicare, Medicaid and interest on the national debt accounts for about two-thirds of the budget.

‘The Big Four’

“I’m waiting for the politician to get up and say, ’There’s only one way to do this: You dig into the big four, Medicare, Medicaid, Social Security, and defense,” Republican Simpson said on CNN. “And anybody giving you anything different than that, you want to walk out the door, stick your finger down your throat, and give them the green weenie.’”

Community services block grants include money for housing, food and medical programs for low-income people, “the kinds of programs that President Obama worked with when he was a community organizer, so this cut is not easy for him,” Lew said. The program would be cut in half to save $350 million, and the remainder would be converted into a competitive grant program, Lew said.

The budget will trim $125 million, or about a quarter of current financing, from the Great Lakes Restoration Initiative, which supports environmental cleanup and protection.

Housing, Streets

The Community Development Block Grant program subsidizes housing, sewers and streets and economic development in low- and moderate-income neighborhoods in cities across the country. The White House will seek a 7.5 percent cut, or $300 million. The program is currently funded at about $4.4 billion, the Department of Housing and Urban Development said on its Web site.

“These three examples alone, of course, represent only a small fraction of the scores of cuts the president had to choose, but they reflect the tough calls he had to make,” Lew said.

Some of the savings from program cuts will be diverted to increased spending in education, innovation and infrastructure, Lew said, “so that we can return to robust economic and job growth” and reduce the unemployment rate of 9 percent last month.

Obama also “wants to work with Congress to reform and simplify our tax code” and take steps to “strengthen and protect Social Security,” Lew said, though he offered no details.

“We cannot win the future, expand the economy and spur job creation if we are saddled with increasingly growing deficits,” Lew said. “The plan will incorporate many tough choices and deep cuts -- as well as smart investments -- to broaden our recovery, spur job creation and prepare the United States to win in the world economy.”

To contact the reporters on this story: Roger Runningen in Washington at rrunningen@bloomberg.net or

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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