Taking the first bold steps to reverse the Bush administration's budget priorities, President Barack Obama – with the support of the labor movement and other progressive groups – is pushing hard for passage of his first budget for 2010. This plan proposes to end Bush's tax cuts for the wealthiest Americans and corporations, create a reserve health care fund, curb growth in military spending and dramatically improve funding for the needs of working families. Because of the structure of the budget, in fact, all major reforms planned for this year, from health care to education, have passage of this budget as their starting point.

Unfortunately, Obama's budget proposal met with some opposition from moderate Democrats in the Senate who insisted on using obscure Senate rules to put up roadblocks for this agenda. Led by Sen. Evan Bayh (D-IN), this group of Democrats sought to hinder some of the most advanced reforms in the budget for health care, environmental policies and spending priorities in the midst of a recession.

Overcoming this opposition to the president within the Democratic Party's own ranks became a key point of struggle for a coalition of progressive grassroots organizations and the labor movement called . In late March, William McNary, president of USAction warned moderate Democrats not to let corporate interests or the influence of the Washington lobbyist stall the budget.

'While we understand that there may be some disagreements on the details of the president's budget,' McNary said, 'we cannot allow that to be reason for blocking change.' Obama was swept into office by a huge mandate for change by the American people and special interests should not be able to be a barrier to the will of the people.

Because the Obama administration has made the budget the centerpiece of its reform agenda, the size and scope of health care reform, for example, will be determined by how well and intact the president's budget proposals remain as they make their way through Congress. The budget battle, indeed, is the starting point for most political struggle for reforms this year and next.

1. Battle of ideas

The Obama administration sees the budget not just as numbers on a page, but rather as a social document that defines policy goals. On a fundamental level, the Obama budget reflects a profound shift in the main ideas that shape – and could eventually reshape – American society.

With the collapse of the American economy and the ensuing bankruptcy of conservative ideology – an ideology that celebrated free-market fundamentalism and excoriated any government role in preventing abuses in the market – a vacuum in the realm of ideas has emerged. Into that breach the Obama administration has reintroduced the idea of an efficient and caring government that aims to address the needs of all of society's stake-holders, including the millions of working families so long ignored or disparaged by conservative ideologues and politicians.

In his campaign and in his actions and speeches as president, President Obama has asserted the basic concept of the link between the individual and the common good. He has repeated, almost like a mantra, the need for shared sacrifice and the mutual responsibility of all people to help the country recover from the economic crisis, concepts which serve as a basis for building a 'more perfect union.'

Further, both in the realm of ideas and practical policy, Obama has linked the soundness of the economy to a more just social policy that addresses issues such as universal health care, clean energy and jobs, and focuses on goals that place human dignity and the environment before corporate profits. He has also, after eight years of the “preemptive strike” doctrine, repeatedly stressed the need to pursue peaceful, diplomatic solutions before resorting to military action.

Just as importantly, the Obama budget, which was forged in the context of a profound worldwide economic, environmental and social crisis, offers the framework for a new discussion about how to restructure the American economy along more productive and just lines, including large-scale investment in alternative-energy programs that will provide 'green jobs' for millions of Americans.

On another refreshing level, the Obama administration has introduced a new measure of honesty (and reality) into the budget process by including war funding in the federal budget. Previously, the Bush administration had funded its wars in Iraq and Afghanistan through supplemental requests outside of the budget process, concealing the cost of those wars and the true extent of the federal budget deficit.

The first Obama budget, if passed into law, would also monitor and reduce wasteful spending, provide a tax cut for 95 percent of working families, boost investments in renewable energy, and increase funding for currently struggling programs like OSHA and other Department of Labor programs that protect workers. And while the entire budget will set a new record in size at $3.6 trillion, it also sets in motion basic revenue and spending principles that could halve the size of the deficit by the end of Obama's first term.

Perhaps that most significant new investments proposed in the new budget are in the health care and the energy sectors. In his speech to Congress on February 24, President Obama pointed to health care and energy as two of the fundamental pillars of the new economy he envisions. 'Now is the time to jump-start job creation, re-start lending, and invest in areas like energy, health care and education that will grow our economy, even as we make hard choices to bring our deficit down,' he said.

On the military side, the Obama budget at least begins to open up new possibilities in the struggle for peace by reducing funding for exotic fighter jets that specialize in cost overruns. New opportunities for funding human needs here at home, while at the same time providing the opportunity for peaceful diplomatic solutions to conflicts abroad have been opened up with this budget.

2. Health care

The Obama budget also creates a $634 billion fund over the next ten years to promote affordable access to health care and help control the skyrocketing cost of prescription drugs. The budget does not offer a precise model for health care reform as the details will be left to the legislative process.

Deputy Director of the White House Office of Management and Budget (OMB) Rob Nabors said, 'I see this process being a very collaborative effort with Congress.' The hundreds of billions projected for this new fund are clear evidence of the administration’s support for universal health coverage in the country. 'What we're talking about is a significant down payment on the single biggest issue that affects the fiscal future of this country,' Nabors said. 'This fund will not cover the whole cost of health care reform,' he added, “but it is a significant start.'

According to the new OMB blog, the health care fund will be financed by 1) curbing federal overpayments to private Medicare Advantage plans which flourished under the previous administration, 2) eliminating Bush’s tax cuts for the top two percent of wealthiest Americans, 3) closing corporate tax loopholes, 4) capping Social Security benefits for the wealthiest Americans 5) eliminating tax breaks for major oil companies who have raked in record profits while the economy collapses.

According to the Alliance for Retired Americans (ARA), privatized Medicare Advantage plans, the plans targeted by the Obama budget for streamlining, cost between 12 percent and 19 percent more than traditional Medicare for the same services, draining the Medicare Trust Fund and hiking out-of-pocket expenses for retirees and other Medicare beneficiaries. The White House estimates that $176 billion over ten years would be saved from this action alone.

Labor and progressive movements also welcomed Obama's push for major reform in 2009. AFL-CIO President John Sweeney stated that 'it is a real health care reform approach with real money to start things rolling.' The Center for American Progress Action Fund welcomed the health care fund, but added that “the budget must be followed by comprehensive reform legislation that, in addition to making affordable care available to all, will help reorient the health care system so it offers quality care geared towards prevention and wellness, not just treating us when we are sick.'

3. Energy and the environment

A second area that is receiving dramatic new attention from the White House is the energy sector. The Obama budget proposes to invest $15 billion each year over the next ten years in wind and solar energy, as well as in developing energy-efficient vehicles.

Some of the revenue for these investments will be raised by creating a 'cap-and-trade' system of selling permits for the emission of greenhouse gases that cause global warming. Big corporate polluters will be required to purchase these tax permits, with the revenue being invested in clean-energy projects. In the event that they emit an amount of pollution under the amount capped by their permit, they will be allowed to sell the surplus to another firm that is producing emissions above its permit level.

Many independent environmental experts believe that a cap-and-trade system on carbon will provide the financial resources needed to develop new energy-efficient, green technologies, while serving as a powerful incentive for polluters to change their production processes by adopting green technologies.

(By comparison, the existing cap-and-trade system on sulfur dioxide emissions that cause acid rain, implemented in 1993, resulted in cutting emissions by about 50 percent and costing only a fraction of the estimated annual price within just eight years, according to data from the Environmental Defense Fund. In other words, those who predicted that a cap-and-trade system on sulfur dioxide would hurt the economy or force big polluters out of business were proven wrong.)

According to the Obama budget's details, the revenues raised in the cap-and-trade system on carbon emissions would also pay for tax cuts for working families already passed by Congress as part of the economic stimulus package. While Obama insisted a serious energy policy that invests in new green technologies, he told reporters at a press conference in late March that 'if Congress has better ideas in terms of how to pay for [the tax cuts for working families], then we're happy to listen.'

The Environmental Protection Agency, which has already begun the process of reversing many of the lax standards the Bush administration adopted toward environmental protection, announced last week that the Obama budget boosts EPA funding by $3 billion, so that it can once again effectively monitor the environment and protect the health of the American public.

EPA Administrator Lisa P. Jackson said, “We are no longer faced with the false choice of a strong economy or a clean environment. The president’s budget shows that making critical and responsible investments in protecting the health and environment of all Americans will also lead to a more vibrant and stable economy.'

The president's environmental and energy proposals have won resounding praise from environmental activists like Carl Pope, Executive Director of the Sierra Club. In a recent blog post, Pope described the proposals and their scope as 'bold' and 'almost incomprehensibly exciting.'

4. Military spending

A third area of the budget that demands careful scrutiny – and will no doubt be the ongoing focus of political struggle – is the military side of the budget. The Obama administration envisages important savings in Defense Department expenditures by the dismantling of costly, over-run-plagued weapons programs and the drawing down of the war in Iraq.

According to the initial outline provided by the OMB, the Obama budget foresees a total of $662.1 billion in military spending in 2009, including the wars in Iraq and Afghanistan. This would be almost $4 billion less than in 2008, and even though 2010 would see a slight bump of around $1 billion over 2009, the military budget for that year would still be below the 2008 level.

The President’s proposed cap on military spending is a courageous political move. There is no single entity (with the possible exception of Wall Street and the banks) that receives more unregulated government largesse than the Pentagon (or, as former President Eisenhower called it, the military industrial complex). Although the president, as commander-in-chief, has ultimate constitutional authority over the Pentagon, it, along with military contractors and a vast network of lobbyists, has effectively usurped that power. In conjunction with the corporate media who push the pro-Pentagon, endless-war cause, this powerful array of generals, bureaucrats, business leaders, politicians and ideologues has for far too long held sway over US foreign and domestic policy.

Abetted by America’s mainstream media, President Bush managed to manufacture a nearly decade long climate of terror and false patriotism in the US. During this time an unchecked flow of taxpayer dollars was lavished on the Pentagon, the open spigot Defense Secretary Robert Gates describes. As a result, the US military budget has reached stratospheric levels, so that the Pentagon is currently funded at a level higher than all the rest of the world’s military budgets combined.

The fact that all military spending, including spending on the wars in Iraq and Afghanistan, has now been lumped together in the Obama budget is a radical break from recent budget policy. The Bush administration separated war expenditures out of the federal budget to screen the public from sticker shock. By leaving funding for the wars in Iraq and Afghanistan out of the defense budget (over $12 billion per month), Bush and Cheney concealed the negative impact of war spending on US society, spending which has forced massive cuts in vital health, education and infrastructure programs, massively increased the national debt, spurred on the economic crisis and added nothing to the nation’s security.

Secretary Gates praised the president's projected military funding as fully meeting requirements for providing for national security while turning off 'the spigot' of military spending left on by the Bush administration since 2001.

5. Pentagon Pork

One important area of savings involves the Iraq war. Obama has pledged to end the 'no-bid' contracts there that have resulted in the wasting of tens of billions of dollars on failed infrastructure projects and trigger-happy mercenaries in Iraq. He has also ordered a two-stage process for withdrawal from Iraq: the largest group of combat forces to be pulled out by August 2010. The remaining force of between 30,000 and 50,000 troops will be brought home by the end of 2011, the timeframe outlined in the security agreement with Iraq.

The Obama budget also projects savings by eliminating Pentagon waste. In his speech to Congress in February, Obama proposed the elimination of wasteful Pentagon spending, particularly 'Cold War-era weapons programs we no longer need.' Hard on the heels of that comment, Obama worked with Congress to create a commission to scrutinize the Pentagon procurement process and estimated that $40 billion over 10 years could be saved by reforming the process.

So far the Obama administration's proposals for military spending have met with mixed reviews. An initial analysis from the Friends Committee on National Legislation (FCNL), a peace organization that lobbies Congress against military-spending hikes, welcomed Obama's plan to 'hold the line' on military spending, but also noted that the plan proposes to use those savings to pay for a dangerous troop build-up in Afghanistan. Still, FCNL urged its members to support passage of the president's budget.

Not all observers shared this view. “If President Obama gets the budget he requested today, we’d be spending 13 times the money engaging the rest of the world through the military as by any other means,” added Miriam Pemberton, a research fellow at the Institute for Policy Studies.

The Council for a Livable World praised the budget proposal, however, for its elimination of new nuclear weapons programs that most critics view as unnecessary and wasteful. Other activists have also pointed out how the new administration can achieve additional savings in the military budget by reducing the US nuclear arsenal. For example, Joseph Cirincione, president of the Ploughshares Fund, recently noted in the Boston Globe that the US nuclear arsenal could be reduced from more than 5,400 nuclear weapons to about 1,000, saving about $20 billion annually in storage and maintenance costs. In addition, Cirincione writes, the US should immediately eliminate the $13 billion spent each year on the failed 'Star Wars' anti-missile program.

Additional progress on this aspect of the budget – the struggle for demilitarization and peaceful solutions – cannot be achieved simply by holding President Obama personally responsible for it. A broad movement for demilitarization, based on traditions of true patriotism and a realistic approach to national security must now be built. The American people are ready to reject the current domination of the federal government by Wall Street and the military-industrial complex. We now possess ample proof of the waste and corruption – not to forget the massive loss of life – this dominance has caused. Everyone is also now well aware that recovery from the biggest economic crisis since the Great Depression will be severely hampered by squandering taxpayer dollars on corporations and executives that rely on militarism and war for their profits.

6. Conclusion

The Obama administration's new budget serves as a guide to the main areas of political struggle in the year ahead. It reflects the general shift in American thinking about the goals of our society, where our resources should be invested and how government spending should be organized. We all need to fight hard for Obama’s new energy and health care policies, which are the primary strengths of his budget – keeping in mind that the president’s decision to keep the details open to discussion and debate means that the people's movement has an excellent opportunity to help forge the best, most progressive policies possible.

On the other hand, weaknesses in the budget, such as insufficiently curtailed military spending and spending for the ongoing war in Afghanistan, must not result in pitting the American people or working families against President Obama. Rather the fight must be against those corporate and right-wing forces that are still powerful enough, in their own self-interested drive for profits, to impose limits on the pace and scope of change – the “real change” that Barack Obama promised and the American people so desperately need.