Barack Obamaâs 'have-it-all' budget
President Barack Obama released a $4 trillion budget Monday designed to convince Americans that they can have it all: more tax breaks for the middle class, more spending on government programs, and just enough cuts and tax hikes to keep the nationâs deficits under control. To pay for it, Obama proposed raising a number of taxes on wealthy taxpayers or businesses â some of them already dismissed as nonstarters by the Republican Congress. They include fees on big banks and taxes on companies that do business overseas â plus spending cuts on health programs and other savings â to cover the costs of all the new initiatives. Story Continued Below Obama isnât suggesting enough cuts or tax increases to eliminate deficits completely, not to mention the long-term debt. But heâll make the case to Americans that bringing deficits down to âsustainableâ levels â below 3 percent of the nationâs economic output â is good enough to keep the debt manageable, a senior administration official said.  âWe can afford to make these investments while remaining fiscally responsible,â Obama said Monday. âWeâve just got to be smarter about paying for our priorities.â Obama is using the budget to challenge Republicans on middle-class issues, as well as national security funding. He made his budget pitch during a visit to the Department of Homeland Security, where he warned Republicans that theyâll undermine the nationâs security and hurt the federal workers who work at those agencies â including the Border Patrol, airport screeners, law enforcement officials, the Coast Guard and the Secret Service â if they donât send him a âcleanâ funding bill that doesnât try to block his immigration executive actions. âDonât jeopardize our national security over this disagreement,â Obama said. âThese Americans arenât just working to keep us safe â they have to take care of their own families. The notion that they would get caught up in a disagreement around policy that has nothing to do with them makes no sense.â Republicans wasted no time rejecting Obamaâs budget. Senate Majority Leader Mitch McConnell called it âanother top-down, backward-looking document that caters to powerful political bosses on the Left and never balancesâever.â House Speaker John Boehner said it âwould impose new taxes and more spending without a responsible plan to honestly address the big challenges facing our country.â And Senate Budget Committee Chairman Mike Enzi and House Budget Committee Chairman Tom Price, in a joint statement, declared that âa proposal that never balances is not a serious plan for Americaâs fiscal future.â The budget calls for $1.091 trillion in discretionary spending for fiscal year 2016, $74 billion above the âsequestrationâ spending caps that Obama wants to eliminate. The additional spending â $38 billion for defense, $37 billion for domestic programs â would produce a $474 billion deficit for next year.  Obama said the sequestration cuts have been bad for economic growth and national security, and warned: âIâm not going to accept a budget that locks in sequestration going forward â¦ I will not accept a budget that severs the vital link between our national security and our economic security.â Administration officials say Obamaâs budget would produce $1.8 trillion in deficit reduction over the next 10 years, including $400 billion in health savings â mainly by delivering health care more efficiently, building on experiments that are already being tried under Obamacare â and $640 billion in net revenue from capital gains tax increases and other tax changes. That includes $95 billion in higher tobacco taxes over 10 years to pay for two initiatives: an extension of the Childrenâs Health Insurance Program â which ends this year if Congress doesnât revive it â and Obamaâs ongoing proposals to guarantee universal access to preschool. The proposal would nearly double taxes on cigarettes and small cigars to about $1.95 per pack from about $1.01 per pack, and index the tax for inflation. The budget also counts on savings from getting rid of waste, fraud and abuse â including $32 billion in savings from more frequent reviews of people who get Supplemental Security Income benefits, which are supposed to go to low-income people with disabilities. The goal is to replace âmindless sequestration cuts with smart reforms,â Office of Management and Budget director Shaun Donovan told reporters at a briefing. Thereâs $82 billion in mandatory spending over 10 years to help the families of 1.1 million children afford child care, as well as $1.5 billion in additional funding for Head Start. It also asks Congress to give states more than $2 billion to help them start paid family leave programs. And Obama wants a 5.5 percent increase in funding for research and development â a total of $146 billion over 10 years â including more money for the National Institutes of Health, scientific research at the Department of Energy and the National Science Foundation, and a Precision Medicine initiative that will try to develop more personalized approaches to medical treatments and cures. Obamaâs budget is full of taxes and other requests that are likely to come to a screeching halt in a Republican Congress, though â including the higher capital gains tax rate, the tobacco taxes and the closing of what White House officials call the âtrust fund loophole,â a provision that allows huge amounts of inherited capital gains to go untaxed. It also asks for $239 million to help the Environmental Protection Agency fight climate change, despite the fact that Senate Majority Leader Mitch McConnell and other Republicans have promised to block some of the agencyâs biggest rules, including a proposed rule to limit carbon dioxide emissions. And thereâs a 7.8 percent increase for the Department of Veterans Affairs, a request that will present a political dilemma for Republicans: Do they want to give more money to the scandal-plagued agency thatâs still reeling from last yearâs revelations of long waiting lists for veteransâ medical care? The White House is also counting on $160 billion in savings from comprehensive immigration reform â the same immigration reform proposals that stalled among Republicans last year and are even more dead now that Obama has infuriated the GOP by issuing executive actions to reduce deportations. Administration officials say itâs in the budget because Obama still supports it, and because the broader immigration legislation would save money by adding younger workers to the workforce, helping to balance out the costs of an aging population. It would also extend the life of the Social Security trust fund by providing more workers to pay taxes into the program. Donovan insisted that including immigration reform, along with the $400 billion in health savings, proves Obama is serious about cutting the costs of entitlements, despite the lack of major initiatives like raising the Medicare eligibility age or the âchained CPIâ proposal Obama has floated in the past to change the formula for Social Security benefits. âI think we have a strong argument that the president has been focused from the beginning on the key drivers of the costs of our entitlements,â Donovan said. The Obama team believes it will win over the public with $277 billion in âmiddle-class and pro-work tax cutsâ â including a tax credit for working spouses, a tripling of the maximum child-care tax credit to $3,000 and an expansion of the Earned Income Tax Credit to include low-wage workers without children. Senior administration officials say the tax package will help 44 million families, with an average benefit of $600 per household. They argue that Republicans have previously endorsed ideas similar to some of those proposals. White House officials say their goal is to keep deficits stable relative to the gross domestic product and bring the long-term debt down slightly. The $474 billion deficit for next year would be about 2.5 percent of GDP, and it would end up in about the same place for 2025 even though the dollar amount would rise to $687 billion. The federal debt â the cumulative total of deficits that the government owes â would start at 75 percent of GDP in 2016 and ease down to 73.3 percent in 2025. The $400 billion in savings administration officials say theyâll get from mandatory health spending programs â mainly Medicare â are similar to the ones Obama proposed in last yearâs budget. They'd cut spending mainly by reducing payments to doctors and other health care providers â going beyond the cuts already included in Obamacare â and by discouraging seniors from buying generous Medigap policies that donât encourage them to be cost-conscious. There are other recycled proposals from past budgets that didnât get anywhere in Congress even when Democrats controlled the Senate. Obamaâs budget includes the âBuffett rule,â which would require people with incomes between $1 million and $2 million to pay at least 30 percent of their income in taxes. It would also save money by cutting crop insurance subsidies by $16 billion over 10 years, reviving a proposal from past budgets that never gets any traction in Congress. Obamaâs team says it doesnât matter if his proposals have stalled out before because his budget should be an expression of his priorities, not the outlines of a final deal with Congress. âThe fact that they didnât pass the first time doesnât mean theyâre not good ideas,â White House press secretary Josh Earnest. Besides, he said, any budget deal would have to be a compromise between a Republican Congress and a Democratic president, and âanything that emerges from those discussions on the budget will require an effort to find common ground.â Earnest wouldnât say whether Obama would veto spending bills from Congress that donât get rid of the sequestration cuts, but he said the threat of the next round of cuts âdoes have a negative impact on our ability to help the middle class, and it does have a negative impact on the ability of the men and women of our military to keep the country safe.â Even though most Republicans have already been blasting the basic framework of the budget â suggesting itâs full of tax increases and will never fly with their side â they havenât ruled out all hope of dealing with Obama. House Ways and Means Committee Chairman Paul Ryan suggested Sunday that heâd like to find âcommon groundâ on corporate tax reform. Democrats said the budget would give Republicans a serious political challenge. âIf the GOP takes this budget and sticks it in a drawer, theyâll be making it crystal clear that theyâre more interested in helping special interests than middle class families,â said Democratic Sen. Chuck Schumer of New York. And from early signs, Obama seems to have avoided angering disgruntled liberals with too many compromises on spending. âIf we are serious about rebuilding the disappearing middle class, we need a budget which creates millions of decent-paying jobs, raises wages, makes college affordable and demands that the wealthiest people and most profitable corporations start paying their fair share of taxes,â said Sen. Bernie Sanders, the Vermont Independent who is the ranking member of the Senate Budget Committee. âIn all these matters, the presidentâs budget begins to move us in the right direction.â