Can Obama Cut the Deficit in 2011?

Even some of President Obama's allies say it will be impossible for his 2011 budget to reduce the deficit without raising taxes for anyone making less than $250,000, according to a New York Times story.  High unemployment rates are making the White House and Democrats in Congress wary of directing too much attention to deficit reduction at the expense of spending on job creation. Democrats’ lack of consensus over how to pursue deficit reduction, as well as reluctance from both parties to vote for spending cuts and tax increases in an election year further challenge the administration’s efforts.

Job creation does not come cheap, however, and that spending boosts the deficit.  A jobs bill that passed through the House in December 2009 increases the original $787 billion economic stimulus price tag by $154 billion, The Wall Street Journal reported.

Balancing state budgets in places like California, Oklahoma, Michigan, and New York is taking a toll on social programs, according to another New York Times story. Decreasing state tax collections and the scheduled federal stimulus funding reductions are leaving governors with no choice but to cut social service programs and cut more state jobs.  Governors of many cash-strapped states are among those wishing for more action on that jobs bill.  According to the article, in his state-of-the-state address, California Gov. Arnold Schwarzenegger is expected to  "proclaim California close to incapable of paying for social services in the next fiscal year, which begins in July, unless the Obama administration greatly increases aid to the state." 

Also today in budget news:
House Approves $154 Billion Job Bill (WSJ)
New Year but No Relief for Strapped States (New York Times)