Arguing that America faces a “make-or-break moment for the middle class and those trying to reach it,” the Obama Administration today released its 2013 Budget – a document that won't pass Congress, but attempts to politically position the President for the November presidential election. Among the highlights released by the White House.
- Spending: Under the President’s Budget, the federal government will spend $3.8 trillion in 2013, nearly flat compared to 2012 projections. The Budget includes $1 trillion in discretionary spending cuts over 10 years to meet the “very tight caps” established by the Budget Control Act, which settled the stalemate last August over the debt ceiling.
- Deficits: The President’s Budget projects a 2012 deficit of $1.33 trillion or 8.5% of GDP, falling to an estimated $901 billion in 2013 or 5.5% of GDP and $704 billion by 2022 or 2.8% of GDP. Total debt held by the public is projected to rise to $19.5 trillion by 2022, about 77% of GDP.
- Taxes: The President’s Budget calls for $1.5 trillion in additional taxes, resulting primarily from the expiration of the 2001 and 2003 Bush tax cuts for the wealthy; the elimination of “inefficient and unfair tax breaks for millionaires”; and the adoption of a “Buffett Rule” so that no household making more than $1 million per year pays less than 30% of its income in taxes. The Budget also includes a “Financial Crisis Responsibility Fee” of $61 billion over 10 years on the nation’s largest financial institutions to “fully compensate taxpayers for their extraordinary support.”
- Job Creation: The President’s Budget includes more than $350 billion in short-term measures aimed at promoting job growth, including a full-year extension of the payroll tax cut and extended unemployment insurance benefits; $50 billion in spending on “roads, rails, and runways”; $60 billion to modernize schools and help states hire teachers; a new tax credit for small businesses providing a tax cut equal to 10% of wages up to $500,000 for new jobs; and tax incentives for manufacturers who create jobs in the U.S., coupled with an end to tax deductions for manufacturers “shipping jobs overseas.”
House Budget Committee Chairman Paul Ryan accused the president of submitting an “irresponsible budget [that] is a recipe for a debt crisis and the decline of America.” According to Ryan, the Obama Budget proposes $47 trillion of government spending over the next decade, leaving a gross debt of $25.9 trillion. The Committee will hold hearings on Wednesday and Thursday with Acting OMB Director Jeffrey Zients and Treasury Secretary Timothy Geithner.
REACTIONS TO THE BUDGET
“Truly scandalous” or a “plan for an economy built to last?” Washington insiders’ reaction to President Obama’s 2013 budget is rolling in. Here’s a quick overview:
- Writing for the Administration, Obama’s Acting OMB Director Jeff Zients argued that the budget “put[s] the country on a sustainable fiscal path, with deficits declining as a share of the economy.” He says the budget plan includes “$1 trillion in deficit reduction” signed into law as part of the August debt ceiling agreement and “puts forward more than $4 trillion of deficit reduction in a balanced way” while also creating “new incentives for companies to bring manufacturing jobs” back to the U.S.
- The Washington Post’s Dana Milbank accused the Obama Administration of playing “dodgeball” by “evading anything resembling a serious budget.” Normally an Administration supporter, Milbank called the budget a “campaign document” that “begins with a broken promise, adds some phony policy assumptions, throws in a few rosy forecasts and omits all kinds of painful decisions.”
- Senate Budget Committee Chairman Kent Conrad praised the Obama budget for continuing “to move the nation in the right direction” by bringing the deficit down from 8.5% of GDP in 2012 to 2.8% in 2022. He called on Republicans to “come together on a plan that modernizes our tax system, reforms our entitlement programs, and attacks wasteful spending.”
- Columnist Charles Krauthammer called the Obama plan “a budget worthy of Greece” and said the budget assumes that “somehow all of us have become Occupy Wall Street and everybody thinks if you redistribute income it would solve our economic problems.”
- The New York Times weighed in with an editorial calling the Obama budget a “welcome contrast to the slashing austerity – and protect-the-wealthy priorities – favored by Republican Congressional leaders and the party’s presidential candidates.” The budget combines “long-term deficit reduction” with “immediate” action “to encourage the fledgling recovery” and includes many “painful cuts” to discretionary programs, including clean water programs, low-income heating assistance and space exploration.
- Republicans on the House and Senate Budget Committees released a joint analysis accusing President Obama of “duck[ing] our fiscal and economic challenges” and advancing “policies that dangerously accelerate the crisis before us.” According to the Republicans, the budget plan “imposes $1.9 trillion in new taxes on families, small businesses, and job creators – all to fund wasteful Washington spending.”
About the only point of agreement in Washington is that the propose budget has little chance of becoming law, but every chance to play a significant role in shaping the upcoming presidential election in November.