President Obama: 2011 Budget Contains Investments to Boost Economy

President Obama today said his $3.834 trillion budget for the upcoming fiscal year contains measures that will help boost employment and economic growth. He called on members of Congress to zero in on waste.

The president began his comments by rebuking the previous administration's economic policies.

"Our government is deeply in debt after what can only be described as a decade of profligacy," Obama said at the White House.

"We can't simply move beyond this crisis," he said . "We have to address the irresponsibility that led to it."

VIDEO: David Muir looks into how the deficit has become as large as it is.Play

The president detailed some of the spending cuts with which he hopes to curtail the federal deficit and urged Republican and Democratic lawmakers to do the same.

"Changing spending as usual depends on changing politics as usual," Obama said, asking members of Congress to follow his lead on reducing "waste in programs I care about."

"The bottom line is this: We simply cannot continue to spend as if deficits don't have consequences, as if waste doesn't matter, as if the hard-earned tax dollars of the American people can be treated like monopoly money, as if we can ignore this challenge for another generation. We can't," the president said.

VIDEO: The presidents budget proposal includes cut-backs on space program funding.Play

The 2011 budget, which begins Oct. 1, is more than the current budget of $3.721 trillion, and the 2009 budget, presented by President Bush, of $3.518 trillion.

There was little reaction from Democrats on Capitol Hill today, but some Republican leaders panned the president's proposals.

"President Obama is submitting another budget that spends too much, taxes too much, and borrows too much," House Minority Leader Rep. John Boehner, R-Ohio, said in a statement. "Under President Obama's budget, the federal government will continue to live well beyond its means for years to come with no relief in sight.

Others were less fiery but critical nevertheless.

"While spending is going up, taxes are going up even faster. Taxes on Americans will increase by over $400 billion -- nearly 20 percent -- next year alone, with no improvement in sight. Does anyone truly believe this is a good time to raise taxes on job creators, or anyone else?" said Senate Minority Leader Mitch McConnell, R-Ky.

"This budget provides a startling figure that should stop us all in our tracks," he added. "According to the administration's budget, the interest on the federal debt is expected to be nearly 6 trillion dollars over the next decade. We've all heard about interest-only loans, but this is the equivalent of an average of $600 billion dollars in interest every year. That's an astonishing number."

Obama today called specifically on McConnell and Boehner to look for ways to cut spending.

The 2011 budget includes $1.415 trillion in discretionary spending and a $1.267 trillion budget deficit, representing 8.3 percent of the gross domestic product. A daunting number, the deficit represents a slight improvement from the budget of 2010, when it was $1.556 trillion, representing 10.6 percent of GDP.

The Obama administration said the budget deficit would peak in 2010, and the president today warned that the road ahead may not be so easy.

"We won't be able to bring down this deficit overnight," Obama said. "We will continue to do what it takes to create jobs."

Tax Cuts and Spending Freeze

One reason for the slightly smaller projected deficit is the decision to let the Bush tax cuts of 2001 and 2003 expire for individuals making more than $200,000 a year and families making more than $250,000. This tax increase, which will occur automatically, will bring in a projected $678 billion in the next decade, the administration said. The tax cuts are due to expire at the end of the 2010 calendar year.

The Obama administration will ask for the Bush 2001 and 2003 tax cuts to be made permanent for individuals who make less than $200,000 and families who make less than $250,000.

Other potential savings include the proposed three-year spending freeze on nonsecurity discretionary spending, which amounts to roughly $250 billion in 10 years; the proposed bank tax -- called a financial crisis responsibility fee -- to repay taxpayers for the Wall Street bailout, amounting to $90 billion in 10 years; and eliminating tax cuts and subsidies for oil, gas and coal companies, which is estimated to be $40 billion.

The budget also includes $20 billion in savings from various terminations and reductions in federal programs, such as eliminating the Save America's Treasures and Preserve America grant programs at the National Park Service, eliminating the advanced earned-income tax credit and terminating the Brownfields Economic Development Initiative.

Defense Secretary Robert Gates "will be putting increased emphasis on also moving forward on canceling the C-17 [military transport aircraft] purchases and alternative engine for the F-35 [stealth fighter jets]," White House Budget Director Orszag said.

"The president dispatched his budget staff to engage in the process of going line by line through the federal budget to look for ways we could save money, so that we can ensure that where there is waste, where there are duplicative programs, where there are programs that have outlived their usefulness, they are eliminated or reduced appropriately," White House communications director Dan Pfeiffer said.

"Even without any new policy changes," Orszag said, "the recovery of the economy will reduce the deficit from roughly 10 percent of the economy in 2010 to about 5 percent of the economy by 2015."

NASA will also experience some cuts, including a cancellation of the NASA Constellation program to develop spacecraft to replace the Space Shuttle with the goal of sending astronauts to the moon and perhaps even Mars. The president also wants to shift "the activity of NASA research into longer range R&D," Orszag said, such as "advanced robotics and other steps that will help to inspire Americans and not to just return a man or a woman to the moon but to undertake the longer-range research. That could succeed in things like space flights to Mars."

Boost to Education, National Security

The president is proposing a 6 percent increase in education spending, including up to a $4 billion increase for programs authorized by the Elementary and Secondary Education Act, $1.35 billion to continue the Race to the Top challenge; and $17 billion more in Pell grant funding.

Administration officials say the reason for the heavy investment in education, despite massive deficits, is to invest in future growth.

"That's really the key to our economic future," Orszag told ABC News. "In addition to spurring job creation now, we need to build a new foundation of economic growth over time and that involves a better education system. It involves investing in research and development to spur innovation. It involves moving to a clean energy future."

Orszag said the budget would expand research and development by $3.7 billion -- for a total of $61.6 in civilian R&D -- "to spur innovation by roughly 6 percent ... and includes more than $6 billion in funding to spur clean energy, both of which is intended to again move us toward that clean energy future and works in concert with the elimination of the subsidies of fossil fuels to move us aggressively there."

On the international front, the president is asking Congress for $33 billion for a 2010 supplemental request for the surge of troops to Afghanistan, and $159.3 billion for 2011 to support ongoing overseas contingency operations, including funds to implement the president's strategies for Afghanistan and Pakistan.

The president is also proposing $734 million more be spent to support the deployment of up to 1,000 new Advanced Imaging Technology screening machines at airport checkpoints and for new explosive-detection equipment for baggage screening, and more funding to increase the number of international flights covered by federal Air Marshals.

Other Proposals

Obama is proposing more than $300 billion in tax cuts in the next decade for individuals, families and businesses, including $100 billion for immediate job-creating investments in small business tax cuts, infrastructure and clean energy; eliminating the tax on capital gains tax on new investments in small business; extending for one year the provision in the stimulus bill allowing small businesses to immediately expense up to $250,000 of qualified investments; increasing of the child care tax break for middle-class families; and extending the Making Work Pay Tax Credit from last year, "because middle class families continue to suffer disproportionately during an economic downturn," Orszag said.

"We recognize that while we have made progress on jobs we have not made enough," Pfeiffer said. "There are still one in 10 Americans looking for work. The president certainly doesn't find that acceptable."

The president is requesting about $237 million for the federal government to purchase, modify and operate the Thomson Correctional Center in Illinois, where the administration is planning to relocate prisoners at the Guantanamo Bay detention camp in Cuba. This is part of the Justice Department budget.