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August 27, 2014

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Obama’s plan creates jobs, cuts the deficit

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President Barack Obama’s budget for fiscal year 2014 is a concrete plan to create jobs and cut the deficit. We do not need to choose between these two priorities. The president’s balanced, compromise plan proves we can do both.

The guiding principle behind the president’s plan is reigniting America’s engine of economic growth: a rising, thriving middle class. The plan is focused on addressing three fundamental questions: How do we attract more jobs to our shores? How do we equip our people with the skills needed to do the jobs of the 21st century? How do we make sure hard work leads to a decent living?

To make America once again a magnet for jobs, the budget invests in high-tech manufacturing, clean energy and infrastructure, laying the foundation for more rapid business growth. These investments will ensure that the jobs of the future are created in America and we stay on the cutting edge of innovation. To give workers the skills they need to compete in the global economy, it invests in education and job training, including a “preschool for all” initiative to ensure children across the country are prepared to succeed. To ensure hard work leads to a decent living, it raises the minimum wage to $9 so an honest day’s work pays more.

The budget does all of these things as part of a comprehensive plan that cuts the deficit and puts the nation on a sound fiscal course. Every new initiative in the plan is fully paid for — not adding a single dime to the deficit.

To be clear, we have already have made important progress in cutting the deficit. Over the past few years, Democrats and Republicans have cut the deficit by more than $2.5 trillion through a mix of spending cuts and raising income tax rates on the wealthiest Americans. This progress puts us more than halfway toward the goal of $4 trillion in deficit reduction that economists say is needed to put us on a fiscally sustainable path.

Now we need to finish the job. That is why the president stands by the compromise offer he made to House Speaker John Boehner during “fiscal cliff” negotiations in December. These proposals would achieve $1.8 trillion in additional deficit reduction over the next 10 years, bringing total deficit reduction to $4.3 trillion while replacing the damaging, arbitrary cuts of the sequester. This deficit reduction is composed of more than $2 of spending cuts for every $1 of new revenue from closing tax loopholes and reducing tax breaks for the wealthiest. And it takes further steps to address the largest driver of long-term deficits — rising health care costs — by including $400 billion in health savings that crack down on waste and fraud and strengthen Medicare for years to come.

By including this compromise offer made to Speaker Boehner in the budget, the president is demonstrating his willingness to make tough choices to find common ground to further reduce the deficit. This offer includes some difficult cuts that the president would not propose on their his own, such as an adjustment to inflation indexing requested by Republicans. But there can be no sacred cows for either party.

Importantly, the budget’s deficit reduction proposals are designed to accelerate the recovery by replacing the damaging sequester and making smart investments in jobs while protecting the most vulnerable — adhering to two key principles laid out in the bipartisan Bowles-Simpson Commission proposal.

The House and Senate have now both passed budget proposals. By returning to the regular order process that members of Congress say they want, we are hopeful that a bipartisan agreement can be reached.

Our country continues to face significant fiscal and economic challenges. But they are surmountable. By working together, we have already made progress in reducing the deficit and restoring economic growth and job creation. The president’s budget provides a specific and responsible plan for continuing this progress. It shows how we can live within our means while further growing the economy, strengthening the middle class, and securing the nation’s future.

Jeff Zients is the acting director of the White House’s Office of Management and Budget.

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  1. America's growing political and economic morass stems from some of the most stubbornly and widely-held economic fallacies that have plagued this country since the Great Depression: That consumption spending and high wages are the drivers of economic growth (While I'm sure this will be met with much scorn and ridicule, I shall be pressing on). The entire GDP framework is based on this fallacy; hence the misconception that government spending can grow an economy, as it is a component of GDP.

    The monetary and fiscal policies which are then put into place are precisely that which has served to impoverish us increasingly, while that which is the real driver of wealth-producing growth is continually taxed and inflated away; private savings and private investment.

    Now while government can give a person a job and a paycheck, the fact is that it CANNOT create wealth. It only destroys wealth by expropriating from the productive and redistributing it--or, subsidizing--the unproductive. So, we see a rise, then, in the GDP. But is it a rise in our overall well-being, aside from those receiving the subsidy? No. Our standard of living has increased--relative to the rest of the world--due to the amount of capital invested per worker--that which has not been increasingly taxed away or redistributed by our central government.

    The '00-'08 boom saw massive debt-financed consumption and the subsequent destruction of personal savings rates, capital consumption, and an explosion of the trade deficit. And, little to no growth that wasn't an unsustainable bubble. Hello???

    And yet public debate centers around whether or not the government is destroying enough of our wealth, or whether or not it's creating enough dependency through ever-expanding subsidies. Meanwhile the Federal Reserve valiantly provides the "needed liquidity"--another fallacy--that further impoverishes us, especially those groups that are now completely dependent on the meager subsidy they are supposed to survive on, whilst enabling the government to fund its profligate spending on imperialist wars on foreign soils without a congressional declaration. et al.

    Thus, the possibilities for any real recovery are necessarily hobbled by the endless and non-sensical blathering driven by political ideologies, and the astounding lack of sound economic theory.

  2. The Congressional Budget Office has not scored the President's 2014 budget, yet. Recall the president's 2013 budget could not be scored by the CBO, too many talking points and not enough budget specific. Recall the Democratic Senate voted against the President's 2013 budget 99-to zero. That may be different this year with the newly Presidential appointed Director of the Office of Management and Budget, and likely the reason the President's budget was 2 months late. But let's wait to see before we hold a budget party to celebrate.

    Carmine D

  3. In the 5 year she has held the job, name one plan Obama has put forward that actually created more non government jobs than it cost?? There are none... His plans are either all hot air, pay back big donors or cost real jobs..