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Obama's $3.9 Trillion Budget Takes More Realistic Approach

President Barack Obama’s budget for fiscal 2015 is perhaps his most realistic to date. Grand bargains are out. Grand new proposals are out, too.

It proposes $3.9 trillion in outlays for fiscal 2015, a $250 billion increase over the $3.6 trillion estimated for fiscal 2014. The topline for base discretionary spending in 2015 is $1.014 trillion, compared to $1.012 trillion in 2014. In its January report, CBO estimated total 2014 discretionary spending at $1.11 trillion when war spending, disaster relief and program integrity initiatives are included.

The “Opportunity For All” budget lives within the two-year deal reached last year between House Budget Chairman Paul D. Ryan, R-Wis., and Senate Budget Chairwoman Patty Murray, D-Wash. — although the White House includes a $56 billion sidecar wish list that would add spending to domestic and defense accounts. That wish list is almost certainly dead on arrival.

As a result, for the first time in years Congress can look at agency budgets as proposed by the administration and not immediately have to think about how to cut them to live within the realities of divided government.

Previously, the administration proposed budgets that assumed the sequester spending cuts enacted in 2011 would immediately disappear. Even when Democrats were in charge, the administration proposed budgets with far more stimulus spending than Congress was willing to enact.

And for all of the conventional wisdom that the president’s budget is always DOA on Capitol Hill, in a post-earmark world, the president’s budget will be scrutinized carefully by lawmakers of both parties.

That’s because the only earmarks that are still considered kosher on Capitol Hill are the ones the president puts in his budget in the first place.

The budget includes many pieces already announced by the White House.

A $302 billion, four-year surface transportation reauthorization plan will be a major focus of Congress this year with a pre-election deadline to avoid draining trust funds and halting new projects around the country — and Obama proposes paying for it in the same way Ways and Means Chairman Dave Camp, R-Mich., did in his tax reform plan — with one-time upfront revenue.

The $56 billion “Opportunity, Growth and Security Initiative” is the administration’s wish list, split evenly between defense and non-defense programs.

But while Democrats are giving the plan lip service support this morning, Senate Democrats aren’t planning to bring a budget resolution to the floor to try and set the stage for it. It does, at least, give Democrats and the administration something to sell to their base ahead of the midterm elections, even if House Republicans shove it quickly into their circular file.

“I am hopeful that Republicans will come back to the table and work with us to bring this initiative up in Congress as a supplement to the work already being done in the Appropriations Committees at the bipartisan spending levels,” Murray said in a statement Tuesday morning.

Republicans declared the wish list dead-on-arrival.

“Contrary to the President’s wish-list of additional spending, my Committee will abide by the budget caps for fiscal year 2015,” said House Appropriations Chairman Harold Rogers, R-Ky.

Ryan ripped the budget as a missed opportunity. “It would demand that families pay more so Washington can spend more. It would hollow out our defense capabilities. And it would do nothing to preserve or strengthen our entitlements ...This budget isn’t a serious document; it’s a campaign brochure.”

State of the Union Priorities

The budget includes many of the bits that Obama emphasized in his State of the Union address, including 45 new manufacturing institutes, a doubling of the Earned Income Tax Credit for childless adults, a recycled version of the president’s plan for universal preschool paid for by a tobacco tax hike, revamped job training programs, an Early Head Start initiative for toddlers and infants and an extension of emergency unemployment insurance.

The EITC plan could actually get traction in Congress, after Ryan praised the EITC as boosting work incentives in his massive Budget Committee report on poverty programs on Monday. Several Republicans have praised the president’s Promise Zones initiative, and his plan to revamp spending on wildfires.

But many of the other proposals have been perennially proposed by Obama only to be ignored by Congress. Ryan’s report dismissed Head Start, for example, as ineffective. And an extension of emergency unemployment insurance hasn’t gone anywhere yet more than two months after they lapsed.

The president does take credit for a dramatically reduced budget deficit in his blueprint — with the deficit shrinking to 1.6 percent of GDP by 2024. The plan would also put the debt on a path of shrinking as a share of the economy after 2015.

However, the budget gets there with $402 billion in 10-year savings in Medicare, Medicaid and other health programs and $650 billion from tax changes that would shrink deductions for the wealthy and enact the “Buffett Rule” setting a 30 percent minimum effective tax rate for millionaires after charitable contributions.

“As a country, we’ve got to make a decision if we’re gonna protect tax breaks for the wealthiest Americans or if we’re gonna make smart investments necessary to create jobs and grow our economy and expand opportunity for every American,” Obama said in remarks this morning. “At a time when our deficits are falling at the fastest rate in 60 years, we’ve got to decide if we’re gonna keep squeezing the middle class or if we’re gonna continue to reduce the deficits responsibly while taking steps to grow and strengthen the middle class.”

But that long-term budget blueprint isn’t going to be enacted by this Congress — something the administration readily admits — with its revenue raisers a nonstarter with House Republicans.

The one-year agency numbers, however, will be where the rubber hits the road.

The wish list, meanwhile, includes a host of items that will appeal to Democratic constituencies and represent in many ways a list of the cost for Obama of losing the House in 2010.

The list would bolster basic research, restore parks, renovate veterans’ hospitals and invest in job skills, reduce maintenance backlogs and improve customer service. It would also allow the Department of Defense to modernize weapons systems, restore readiness and invest in facilities.

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