Budget Fights Begin With Obama's $4.23 Trillion Proposal

President Barack Obama proposed a $4.23 trillion fiscal 2017 budget Tuesday, which the White House argued contains some proposals that could win bipartisan support, even though Republicans were scathing in their criticism of what's likely to be the administration's last complete fiscal plan.

Senior administration officials specifically cited proposed funding for cancer research, fighting drug addiction and expanded tax credits that would support work and fight poverty.

Shaun Donovan, director of the White House Office of Management and Budget, pushed back against the Republican charge that the budget is “dead on arrival.” He said many of the president’s proposals from last year’s budget became law, including raising the discretionary spending caps and passing appropriations bills free of “poison pill riders.”

“So the question here isn't a fight between the administration and Republicans, it’s a fight within the Republican Party,” Donovan said during a press conference at the budget office.

“We’re already seeing, despite some people saying on the Republican side we should live by the deal, we’re seeing others that say we ought to cut below the deal, we’re seeing others that say we ought to raise defense spending above the deal without non-defense,” he said referring to last year’s budget deal (PL 114-74).

In his proposal, Obama seeks $4.23 trillion in budget authority in the fiscal year that begins Oct. 1, partly funded with $3.64 trillion in revenue. The administration projects $4.15 trillion in actual spending measured as outlays during the fiscal year, resulting in a deficit of $503 billion.

As expected, the budget reflects the fiscal 2017 discretionary spending caps agreed to in the budget deal. But as was the case with previous blueprints, the 10-year plan proposes to repeal the sequester-lowered discretionary caps and the across-the-board cuts to mandatory spending programs in subsequent years, beginning in fiscal 2018.

Fighting Poverty

Administration officials expressed hope they might be able to reach common ground with Republicans on some anti-poverty initiatives. For example, both Obama and Paul D. Ryan of Wisconsin, the current House speaker, have argued in favor of expanding the Earned Income Tax Credit to provide an incentive for childless adults to get jobs.

They differ in how to offset the cost, however, with Ryan wanting to find savings in existing poverty programs and Obama through closing tax breaks.

Jason Furman, chairman of Obama’s Council of Economic Advisers, said the administration would be “happy” to work with Congress on a pay-for, but he added that the White House does not want to cut one benefit to pay for another. “If you cut one thing that's helping to reduce poverty and use it to advance something else that would reduce poverty, you haven’t made the type of improvements that we envision,” he said.

GOP lawmakers roundly criticized the budget plan for being irresponsible even before it was issued. The two Budget Committee chairmen, Tom Price of Georgia in the House and Michael B. Enzi of Wyoming in the Senate, announced last week they will skip the budget committees’ usual hearings over the president’s budget.

Obama press secretary Josh Earnest took a swipe at the GOP for that, saying Republicans were foregoing the opportunity to learn about Obama’s proposal to strengthen defenses against cyber attacks. “It’s critical to our national security,” he said. “It’s certainly critical to our economy. That’s all the more reason it’s unfortunate that Republicans in the Budget Committee won't even have a conversation with us about it.”

House Financial Services Chairman Jeb Hensarling, R-Texas, criticized the timing of the president's request. 

“Once again, the president submitted his budget after the statutory deadline and, once again, it wasn't worth the wait," Hensarling said. "The only silver lining for American taxpayers is that this budget proposal is the last budget proposal from the Obama administration."

Outlays, Revenue Increase

Compared with administration estimates for the current year, the fiscal 2017 budget would increase outlays by $196 billion and increase revenue by $308 billion in the coming year.

Measured over 10 years, the proposal would cost $52.63 trillion between 2017 and 2026, $26 billion less than the $52.89 trillion that the administration estimates would be spent if current laws and policies remained in effect. Compared to that same adjusted baseline, the plan would raise $46.52 trillion in revenue, $3.38 trillion more than the $43.137 trillion estimated to be raised under current laws and policies.

Administration officials said the more than $3 trillion in additional projected revenue over a decade would be the product of economic growth resulting from budget proposals, as well as the closing of tax breaks and tax increases.

The White House said the plan would reduce the deficit by $2.9 trillion over 10 years.

That includes $378 billion attributed to health care savings, $955 billion from closing tax breaks for the wealthy and $170 billion in savings generated by an overhaul of immigration laws.

If the budget were adopted in full, it would keep the deficit under 3 percent as a share of the gross national product over the 10-year period. Administration officials said the budget would stabilize the fast growing national debt, putting it at  75.3 percent of GDP in 2026. Under current laws, they said, the debt would grow to 87.6 percent of GDP in 2026.

Overall, the budget would increase spending in the coming fiscal year by about 5 percent from this year’s level, to $4.15 trillion in outlays.  Almost the entire increase comes from mandatory programs such as Social Security and Medicaid. Discretionary spending, which is set by Congress in annual appropriations bills, would increase by 0.8 percent, budget documents show.

The White House forecasts 2.5 percent economic growth between calendar years 2016 and 2018, down from a rosier forecast last year. The economic forecast assumes the budget is enacted in full.

 

 

 

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