Obama's $3.73 trillion budget blueprint holds out the prospect of lower deficits in the future even as it projects that the annual shortfall will spike to $1.65 trillion in the current budget year. That would be the highest dollar amount ever, and the largest as a percentage of the economy since World War II.
Predictably, Obama's budget was immediately hit by Republicans for not going far enough on the spending-cut side and relying too much on tax increases.
The Republicans have their own plans which call for far deeper spending cuts than Obama is seeking. The GOP proposals are extremely light on the new-taxes side of the ledger.
But neither the Obama plan nor proposals put forward by Republicans deal with the real problem: the government's long-term debt, which now stands at $14.1 trillion and is growing. Both Obama and the GOP focus in their proposals on short-term deficits rather than long-term debt.
"America is emerging from the worst recession in generations," Obama asserts in his introductory "Budget Message of the President."
And, indeed it is. Despite stubborn unemployment, corporate profits are booming, credit markets are once again functioning smoothly and the stock market is booming.
As companies and individuals make more money, government deficits will shrink as tax receipts go up and recession-fighting spending goes down. But the so-called structural deficit - largely spending for Social Security, Medicare and other guaranteed-benefit programs - will keep rising until overall debt levels become unsustainable.
"My view is that the president's budget punted on the structural deficits issue. He did not give us any clear path forward to deal with them," said David Walker, former comptroller general of the United States and now head of a balanced-budget advocacy group called Comeback America Initiative.
Obama also ignored nearly all of the spending cut and tax increase recommendations of his own bipartisan deficit commission.
Reagan's GOP suffered a heavy loss of congressional seats in 1982, two years after his sweeping presidential victory. The losses were due in large part to what was then described as the worst recession since the Great Depression.
But by 1984, the economy was once again thriving. And Reagan was re-elected in a landslide.
"I don't think there's any question that the Obama team is focused on the Reagan re-election strategy," said GOP consultant Rich Galen. "Reagan won 49 states in 1984 because it was 'morning in America' again because the economy had come back. I think the Obama people are rolling the dice."
Of course, in that earlier rebound, jobs returned relatively quickly. Now the unemployment rate is at 9 percent even though the recession officially ended in the summer of 2009 and private forecasts suggest it will still be 8 percent or higher or so by Election Day 2012. In fact, Obama's own budget document projects a jobless rate of 8.6 percent in 2012. __
EDITOR'S NOTE: Tom Raum covers politics and the economy for The Associated Press.