Little chance for Obama's budget

WASHINGTON — President Barack Obama's proposed federal budget may be more campaign commercial than governing document.

His $3.8 trillion budget for the fiscal year that starts Oct. 1 — and blueprint for the coming decade — is filled with promises sure to appeal to the voters he seeks to win re-election in November, such as new spending to hire teachers and tax increases on the wealthy.

Yet the budget, unveiled Monday, has no chance of passing in Congress, where Republicans have already rejected his calls for more spending and taxes. It offers little prospect of breaking the Washington cycle of lurching from fiscal crisis to fiscal crisis with temporary agreements and no consensus on permanent solutions. And it would maintain a decade of red ink while putting off until after the election — at the earliest — any detailed proposals to fix long-term problems in Social Security, Medicare and Medicaid.

“It's not going to be enacted,” said Robert Bixby, executive director of the Concord Coalition, a bipartisan group that advocates fiscal responsibility. “It's designed to shape the campaign. There's a lot of spending for new investments, and there's spending caps in the future so he can claim two things at once.”

“The president's budget fails to lay out a substantive path to restore fiscal sanity,” said David M. Walker, former director of the Government Accountability Office. “It does not include enough specifics regarding comprehensive tax reform and neglects any reforms to Social Security. It is not bold enough or specific enough regarding proposed changes to Medicare, Medicaid and other health reforms.”

Obama touted his budget proposal at a community college in Annandale, Va., where he used the same broad themes he has used since Labor Day to frame the coming election.

“We've got a choice,” he said. “We can settle for a country where a few people do really, really well, and everybody else struggles to get by. Or we can restore an economy where everybody gets a fair shot, everybody does their fair share, everybody plays by the same set of rules — from Washington to Wall Street to Main Street.”

In his budget, Obama stressed the need for federal spending to help people get a better foothold in a struggling economy. Among his proposals: a $350 billion plan to stimulate the economy, including many specifics that Congress rejected last year.

He also proposes to let tax cuts expire as scheduled on Dec. 31 for those making more than $250,000. That's unlikely to happen, either: Republicans, who control the House of Representative and can block Senate action, are against it.

The president proposes to extend the George W. Bush-era tax cuts permanently for incomes below $250,000. Republicans demand that the tax cuts be extended for higher incomes as well.

If both sides hold firm, they will let all the tax cuts expire at the end of this year. One likely compromise: They could extend them all, as they did for two years at the end of 2010.

Obama did propose changing a part of Medicare financing that would end one of Washington's annual stopgap solutions: the need each year to restore full Medicare payments to doctors. The prospects for permanently fixing the problem, caused by an earlier law mandating lower payments, remain uncertain.

The president did not, however, propose specific solutions to the long-term problems in Medicare and Social Security, which will grow worse as the baby boom generation retires and collects benefits.

Even if enacted as proposed, Obama's budget would spend $901 billion more next year than it took in. That would be the first time in five years that the annual deficit dipped below $1 trillion.

And it would fall short of his 2009 pledge to cut the deficit in half by 2013 — to about $650 billion by his own accounting at the time.
Over the coming decade, Obama's budget would include deficits totaling $6.7 trillion. Including interest, they would increase the debt held by the public from $11.6 trillion in fiscal 2012 to $19.5 trillion in fiscal 2022. It was $7.5 trillion when he took office in 2009.

One result of the deficits: The amount of the federal budget devoted to paying interest would increase from 6 percent this year to 14.6 percent in 2022.

Deficits over the coming decade would be lower — totaling about $3.1 trillion — if Congress and Obama did nothing. That's largely because taxes would go up for everyone as the Bush-era tax cuts expired Dec. 31.

In the Republican-controlled House, Budget Committee Chairman Paul Ryan, R-Wis., plans to propose a budget in April that would attempt to rein in Medicare spending. He is expected to propose again that Medicare beneficiaries after 2022 get to pick from different plans, with federal aid to help pay the cost.

His Social Security proposals are less specific, although Ryan has in the past proposed permitting taxpayers to invest their Social Security taxes in private accounts.

In the Democratic-controlled Senate, Democrats did not bring a budget to the Senate floor last year and don't plan to do so this year.
By law, Congress is supposed to pass a general budget outline by April 15. The outline guides the appropriations and tax-writing committees, which then write legislation specifying spending and tax levels.

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