The $3.9-trillion budget for the 2015 fiscal year President Barack Obama sent to Congress Tuesday morning was well in keeping with the pledge he made during this year’s State of the Union address: to restore opportunity to the middle class. A press release detailing the proposal proclaimed that it would “show how to achieve real, lasting economic security and expand opportunity for all so that every American who is willing to work hard can get ahead.” Or more specifically, the president’s budget was designed, at least theoretically, to be a road map to implementing what he called his opportunity agenda in a “balanced and responsible way.” It is a means to create opportunity for future generations of Americans without leaving them “a mountain of debt,” the president also noted. Stripping aside the rhetoric, the Obama budget seeks billions of dollars in fresh spending to spur economic growth, but also promises to lower the federal budget deficit.
To implement new federal government spending, while lowering the federal deficit, the budget calls for raising the taxes on wealthy Americans, decreasing payments to healthcare providers, and overhauling U.S. immigration law.
When analyzing the president’s 2015 budget, it is important to keep in mind that this year is an election year. Even though his Tuesday morning statement to the press emphasized that the new spending he requested adheres to spending levels agreed to by both parties, it is clear that the opportunity agenda the budget supports will go far to appease the Democratic voter based and draw a contrast between his party and the Republicans.
His plan does include some spending cuts — expenditures on the Department of Defense will decrease by $495.6 billion, while funds allotted to agencies like the departments of Health & Human Services, Agriculture, Justice, Labor, and Homeland Security will decrease, as will spending on the Environmental Protection Agency. But a varied lineup of liberal policy schemes — namely, the four pillars of the president’s opportunity agenda — creating more “good” jobs and higher wages, training workers to get “those good” jobs, guaranteeing every child access to a world class education, and making sure our economy is one in which hard work is rewarded — will be supported in small party by the targeted spending cuts, primarily by the more than $1 trillion in new taxes.
Of those new takes, much of the burden falling on major businesses and the wealthy. Comparatively, Republicans have promised for three years to lower the top income tax rate to 25 percent.
New taxes will help to slower the rate of borrowing over the next decade, with a portion of the proceeds earmarked for deficit reduction. But Obama also called for more than $55 billion in new spending for defense, roads and bridges, universal preschool education, and expanded tax credits for the poor. New taxes will pay for those initiatives as well. The budget for the Department of Education will swell by $68.6 billion, the Department of Energy by $27.9 billion, the Department of Transportation by $14 billion, and Social Security Administration will be allocated $9.1 million more than in 2013.
However, for this opportunity agency to be enacted, Congress must approve the budget, and the likelihood that Obama’s spending and taxation requests will be approved in an election year is extremely low. It is true that portions of budget could see bipartisan support — like an reconstruction of the business tax code that would provide the funds for infrastructure spending — but it avoided many other possible compromises. Obama did propose using a less-generous measure of inflation to determine Social Security Benefits, which would have decelerated spending on the program. He also included a proposal — the so-called chained consumer price index — which contributed to the failure of Republican and Democrat lawmakers to struck a grand bargain on U.S. debt last year.
In fact, Republicans believe that the spending blueprint Obama created would surpass the caps placed on agency budgets by a compromise he and congressional Democrats made with GOP lawmakers in a budget compromise barely three months ago.
To Speaker of the House John Boehner, the budget request was “a clear sign this president has given up on any efforts to address our serious fiscal challenges that are undermining the future of our kids and grandkids.” The Ohio Republican even called it perhaps his most irresponsible budget yet, even “after years of fiscal and economic mismanagement.” Furthermore, “despite signing last year’s bipartisan budget deal — and touting it as an accomplishment — the president now proposes violating that agreement with a spending surge,” he said. “What’s more, he proposes raising even more taxes — not to reduce the deficit but to spend more taxpayer money.”
Similarly, Republican House Budget Committee Chair Paul Ryan of Wisconsin proclaimed: “This budget isn’t a serious document; it’s a campaign brochure.” If by campaign brochure Ryan meant the President’s budget request was more about a grand vision than numbers and figures, then he was correct. “Our budget is about choices, it’s about our values,” Obama said during an appearance at Powell Elementary School in Washington D.C. “As a country we’ve got to make a decision if we’re going to protect tax breaks for the wealthiest Americans or if we’re going to make smart investments necessary to create jobs and grow our economy, and expand opportunity for every American.”
But still the president did not fail to point out some important figures. In his message to Congress, Obama argued that his policies not only have the deficit under control, but will improve the country’s finances in the coming years. His proposal will reduce borrowing by $1.4 trillion by 2024, which comes on top of the $4 trillion in deficit-reducing measures enacted by Congress since disagreements over the budget first began plaguing the U.S. government three years ago.
If the budget is passed, the White House has calculated that the deficit will drop to $564 billion in 2015, or 3.1 percent of gross domestic product, down from $649 billion this year. By 2024, the deficit is expected to drop to just $434 billion, or 1.6 percent of GDP, which would be the smallest deficit since 2007, before the financial crisis disrupted the economy. Plus, a contracting deficit would reduce borrowing, meaning the United States’ overall debt would decrease more slowly. According to the White House, under the Obama administration’s proposal, debt would shrink to 69 percent of the economy by 2024. Today, it stands at 74.4 percent.
More From Wall St. Cheat Sheet:
- Obama: Actions in Ukraine Put Russia ‘On the Wrong Side of History’
- Republicans and Sleet Alike to Hit Hard on Texas Primaries
- Tax Reform 2014: Will the GOP Pursue Rep. Camp’s Proposal?
Follow Meghan on Twitter @MFoley_WSCS
Read the original article from The Cheat Sheet