A New, Ambitious Course of Action

President Obama Releases a Blueprint for the Federal Budget

Michael Ettlinger provides analysis on President Obama’s blueprint for the federal government, which prioritizes spending on health care, energy, and education.

President Barack Obama stands with his economic team as he speaks about his fiscal 2010 federal budget. (AP/Charles Dharapak)
President Barack Obama stands with his economic team as he speaks about his fiscal 2010 federal budget. (AP/Charles Dharapak)

More on the Budget: Defense | Energy | Education

The budget blueprint released by President Obama today is a positive shock to the system.

First, it stands apart for its integrity. It lays it all out there: the size of the deficit, the cost of the war, the cost of tax reductions, the details of tax increases, the state of the economy. It’s all there for everyone to see without deceit. It’s sad that such honesty is novel, but it is, and it’s welcome.

Second, the blueprint is unflinching in following through on the American Recovery and Reinvestment Act that was just passed into law. That legislation is critical to getting our economy back on track. It would be a huge mistake in the budget to backslide from ARRA by being overly concerned with deficits in next two years, but the budget blueprint acknowledges that deficits on the scale we’ll see in the next two years are unsustainable over the long run.

Third, the budget doesn’t waver from the vision that President Obama offered for the nation’s future during his campaign for office—in particular, the path to strong long-term economic growth. The linchpins of that plan have always been to reform the health care system, build a low-carbon energy economy, and support education. It’s all right there in this budget: $634 billion to pay for health care reform, a cap-and-trade system for carbon reduction coupled with billions of investment dollars for renewable energy and efficiency, and billions of additional funding for education. These would be dramatic changes if enacted.

Health Care

Health care reform is a key to our economic future. The United States spent an estimated $2.4 trillion on health care in 2008, and this spending is expected to consume a greater and greater share of our economy in years to come. We spend a higher share of our national income on health care than any other economically advanced country, yet we don’t have better health outcomes.

Spending so much on health care compared to other countries drags on our economy in several ways. It’s simply an inefficient use of resources as we spend so much on what others get for much less. It also undermines our economic competitiveness as employers that provide the lion’s share of health coverage to working adults and their families strain to keep up with rising costs that their overseas competitors do not face. The challenge facing U.S. automakers is a prime example of this.

And finally, the cost of the Medicare program for the elderly, Medicaid for low-income families, and health care for the military and veterans are rising along with health care costs in general, which places an enormous strain on the federal budget. These costs are a leading cause of our long-term deficits. The Obama budget sets aside $634 billion as a down payment on a reformed health care system that would provide coverage for all and make the system more efficient and effective. This is an investment that will more than pay for itself in the long run from an economic perspective, a fiscal perspective, and a health perspective.


Energy transformation is also key to the nation’s economic future. As the spike in energy prices this past summer demonstrated, our nation is very vulnerable economically as long as it relies so heavily on fossil fuels largely produced by other nations and traded in a world market, not to mention the security concerns that arise from being dependent on oil from sometimes unstable and hostile regimes.

Using energy more efficiently and from domestically produced renewable sources will gain us a greater degree of energy independence, improve our balance of trade, create jobs, and lower consumers’ energy bills. The president’s budget includes a cap-and-trade system that would auction the right to emit carbon into the atmosphere, with a steady decrease in allowable pollution. This is an efficient way to limit pollution from the use of fossil fuels that are the underlying source of carbon emissions. The money from these auctions is used to provide tax cuts for working families and pay for investments in new clean energy technologies.


A well-educated population and workforce is a key to any nation’s economic success. Education is both a path to good jobs and to a highly inventive and productive economy. Yet today education outcomes in the United States are falling behind most international competitors. The president’s budget recognizes the need for urgent action by making key investments in improving education.


These aren’t small changes. They represent a substantial shift in direction and priorities. But change is what candidate Obama offered during his campaign. These policies are, for the most part, precisely what he told the American public he was going to do if elected and what they chose by electing him.

It would have been easy at this juncture for President Obama to have taken a much easier course and reigned in his ambitions for the nation. He could have cited the economic conditions or the fiscal situation as an excuse. He could have chosen a path that would be easier with a Congress that has a substantial number of members who are opposed to this course and will have a hard time working through such an ambitious agenda in the short time the budget process will allow.

He could have chosen a path that would have been safer with the public who will hear critique after critique of what he has proposed—not because his policies are bad, but because there are many views on how to achieve the ends he wishes to achieve and the volume of disagreement will be directly proportional to the magnitude of what he has offered.

But, he has chosen a more difficult course. It is, however, a course that, if it succeeds, will leave the country in a much stronger place and on the long-term path to economic success that we all wish to see.

More on President Obama’s budget blueprint:

Defense: Obama’s Defense Budget Is on Target, by Lawrence J. Korb

Energy: Energy Budget Is Sunlight After Eight Years of Darkness, by Daniel J. Weiss

Education: Investing Wisely in Our Children, Cynthia G. Brown and Melissa Lazarín

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Michael Ettlinger

Vice President, Economic Policy