Obama Budget Doubles Down on Populist Proposals
President Obama today doubled down on the populist proposals central to his re-election campaign with a $3.7 trillion budget that outlines his tax and spending priorities for 2013.
“In the State of the Union, I outlined a blueprint for an economy that is built to last, an economy built on new manufacturing and new sources of energy and new skills and education for the American people. Today we’re releasing the details of that blueprint in the form of next year’s budget,” Obama said in a speech at a community college in northern Virginia.
“And don’t worry, I will not read it to you. It’s long and a lot of numbers,” he added, drawing laughs from the crowd.
The Obama budget calls for $1.3 trillion in spending on the nation’s credit card next year, including $350 billion in spending on jobs programs and $476 billion in infrastructure projects. Obama also wants to boost aid for manufacturing research and development by 19 percent above current levels, to $2.2 billion.
To pay for the spending, the president would raise $1.5 trillion in added tax revenue, largely from higher taxes on wealthier Americans. He would allow the Bush tax cuts to expire on families earning more than $250,000 a year and impose a new minimum tax of 30 percent on millionaires, which the administration has called the “Buffett Rule.”
But with no chance that Congress will enact the agenda in an election year – and many of the included proposals already rejected — the presentation today was a moment of political theater aimed at projecting an image of the president as a “warrior for the middle class.”
“You know, the budget that we’re releasing today is a reflection of shared responsibility,” Obama said, repeating a refrain he’s used on the campaign trail. “It says that if we’re serious about investing in our future and investing in community colleges and investing in new energy technology and investing in basic research, well, we’ve got to pay for it, and that means we’ve got to make some choices.”
The president is seeking $360 billion in cuts to Medicare and Medicaid and $278 billion in savings from non-health benefits programs such as agriculture subsidies and federal civilian worker pensions – cuts he said he “wouldn’t normally make if they weren’t absolutely necessary.”
“But they are” Obama said, “and the truth is we’re going to have to make some tough choices in order to put this country back on a more sustainable fiscal path.”
The administration claims the budget would reduce the deficit $4 trillion by 2022 through a spate of tax increases, war savings, and spending cuts previously agreed to with Congress.
Republicans have disputed the deficit reduction numbers – which they say reflect gimmickry – and have blasted the budget document as a reflection of a broken promise and overt attempt to woo voters.
“His budget for next year is more of the same,” Republican National Committee Chairman Reince Priebus said. “It’s full of more spending and more tax increases that have put this country deeper into debt. Instead of mortgaging our children’s future, President Obama should have fulfilled his promise to cut spending.”
Senate Minority Leader Mitch McConnell called the budget a “campaign document.”
“This proposal isn’t really a budget at all,” he said. “This was a real opportunity for the President to get serious about the fiscal situation we face in the Obama economy, but once again, the President is shirking his responsibility to lead and using this budget to divide.”
Republicans also note that despite the cuts Obama is heralding, the president’s budget would mark the fourth straight year that deficit spending exceeds $1 trillion — falling well short of his 2009 promise to “cut the deficit we inherited by half by the end of my first term in office.”
White House chief of staff Jack Lew has denied Obama broke his promise, insisting Sunday that the economic crisis demanded emergency spending in the form of the Recovery Act.
“It cost money in terms of lost revenue and slower economic growth. We’re on track now,” Lew said. “We’ve seen several months of sustained economic growth and job creation, but we’re not out of the woods yet.”
Obama's new budget: Higher taxes for the wealthy
WASHINGTON (AP) — President Barack Obama unveiled a $3.8 trillion spending plan on Monday for 2013 that seeks to achieve $4 trillion in deficit reduction over the next decade but does little to restrain growth in the government's huge health benefit programs, a major cause of future deficits.
Obama's new budget was immediately attacked by Republicans as a retread of previously rejected ideas. The budget battle is likely to be a major component of the fall election campaign.
The president would achieve $1.5 trillion of the deficit reductions in tax increases on the wealthy and by removing certain corporate tax breaks. Obama rejected GOP charges of class warfare. In his budget message, he said, "This is not about class warfare. This is about the nation's welfare."
In a message that repeated populist themes Obama also sounded in his State of the Union address, the president defended his proposed tax increases on the wealthy, saying it was important that the burden of getting deficits under control be a shared responsibility.
"This is about making fair choices that benefit not just the people who have done fantastically well over the last few decades but that also benefit the middle class, those fighting to get into the middle class and the economy as a whole," Obama said.
Obama used an appearance before students at Northern Virginia Community College to unveil the budget and highlight a $8 billion proposal that aims at boosting the ability of the nation's community colleges to train students for the jobs of the future. He told the students his budget was a "reflection of shared responsibility."
While administration officials defended the overall plan as a balanced approach, Republicans attacked it as failing to enough to restrain the deficit, which Obama had promised in 2009 to cut in half by the end of his first term.
"This isn't really a budget at all. It's a campaign document," said Senate Republican Leader Mitch McConnell of Kentucky. "The president is shirking his responsibility to lead and using this budget to divide."
Republican Rep. Paul Ryan, chairman of the House Budget Committee, said that Obama had ducked "the responsibility to tackle this country's real fiscal problems.
Ryan is preparing an alternative to Obama's budget that will be similar to a measure that the House approved last year but failed in the Senate where many lawmakers objected to a major overhaul to Medicare.
"We do not intend on backing off on anything," Ryan said in an interview. "We intend on giving the country an alternative and a solution to our biggest problems."
Republicans challenged the math underlying Obama's budget, saying it double-counted deficit reductions already approved in an August budget deal and also claimed $848 billion in savings from ending the wars in Iraq and Afghanistan even though this money would not have been spent.
Republican presidential candidate Mitt Romney attacked Obama's spending plan for failing to "take any meaningful steps toward solving our entitlement crisis."
This year's budget debate is expected to dominate the presidential contest and congressional elections with the issue not finally resolved probably until a lame-duck session of Congress after the November election, when lawmakers will have to decide what to do with expiring Bush-era tax cuts and looming across-the-board spending cuts.
Obama's new spending plan projects a deficit for the current budget year of $1.33 trillion, marking the fourth straight year that the deficit would top $1 trillion.
The spending plan projects the deficit would decrease to $901 billion in the 2013 budget year, which begins Oct. 1. That reflects $3.8 trillion in spending next year, an increase of 0.2 percent over this year's expected outlays, and a 17.5 percent increase in revenues.
The deficits are projected to gradually go down to $575 billion in 2018, which would still be higher in dollar terms than any deficits run up before Obama took office. It would be below 3 percent of the total economy, however, and thus at a level economists generally consider sustainable.
Obama's budget hewed closely to the approach he outlined in September in a submission to the congressional "supercommittee" that failed to agree on at least $1.2 trillion in additional spending cuts to keep across-the-board cuts from taking effect next January.
The Obama budget stuck to the caps on annual appropriations approved in August that are designed to save $1 trillion over the next decade. It also put forward $1.5 trillion in higher taxes, primarily by allowing the Bush-era tax cuts to expire at the end of this year for families making $250,000 or more per year.
Obama, as he has in the past, also proposed eliminating tax deductions the wealthy receive and would also put in place a rule named for billionaire Warren Buffett that would seek to make sure that households making more than $1 million annually pay at least 30 percent of their income in taxes.
Obama would also impose a new $61 billion tax over 10 years on big banks aimed at recovering the costs of the financial bailout and providing money to help homeowners facing foreclosure on their homes. The proposal also would raise $41 billion over 10 years by eliminating tax breaks for oil, gas and coal companies and it claims significant savings from ending the wars in Iraq and Afghanistan.
It would save $25 billion over 11 years through cutting costs in the U.S. Postal Service, including eliminating Saturday mail delivery.
Among the areas targeted for increases, Obama proposed $476 billion in increased spending on transportation projects including efforts to expand inner-city rail services.
To spur job creation in the short-term, Obama is proposing a $50 billion "upfront" investment for transportation, $30 billion to modernize at least 35,000 schools and $30 billion to help states hire teachers and police, rescue and fire department workers. Republicans in Congress, opposed to further stimulus spending, have blocked these proposals in the past.
The Obama budget seeks $360 billion in savings in Medicare and Medicaid mainly through reduced payments to health care providers, avoiding tougher measures, advocated by House Republicans and the deficit commissions, which supporters said were critical to the cause of restraining health care costs. The projections in Obama's budget show that he is doing little to restrain the surge in these programs expected in coming years with the retirement of baby boomers. Obama's budget projects that Medicare spending will double over the coming decade from $478 billion this year to almost $1 trillion in 2022.
Medicaid, the government health care program for the poor and disabled, would more than double from $255 billion this year to $589 billion by 2022.
And last but not least.... "McConnell: President's Budget Will Fail in Senate!"
Senate Minority Leader Mitch McConnell said he is so confident that Democrats will not support President Obama’s budget, he plans to introduce the bill himself.
With Obama set to release his 2013 budget Monday, the Kentucky Republican said he will do the same thing he did last year when the Senate was trying to pass a budget.
“I offered President Obama’s budget, since the Democrats didn’t seem to want to develop their own budget and didn’t want to vote for his. His budget was defeated 97 to nothing,” McConnell said on CBS’s “Face the Nation.”
Republicans have repeatedly attacked Senate Democrats for failing to produce a budget.
“Senate Democrats haven’t passed a budget in a thousand days, even though the law requires it,” said McConnell.
In theory Congress passes a budget every year, but a divided legislative branch often means that Congress will instead pass temporary funding bills.
Both parties avoided a government shutdown in December by passing an omnibus spending bill for 2012.