Barack Obamaâs budget strategy seeks a way out of the spending caps
The great tension in Washingtonâs budget battles is how to operate the government in the here and now when so much political stalemate remains over the future and the seemingly intractable deficits down the road. For President Barack Obama, this has been doubly true because of the financial collapse he inherited and the scope of his ambitions. Now in his last years, he offered a new budget Monday that attempts to reset this history by investing again in basic appropriations for the core government. Story Continued Below Most simply, his $4 trillion plan is best understood as the opening bid in hostage negotiations with the Republican Congress. At issue is a set of strict appropriations caps that Obama agreed to during the 2011 debt ceiling crisis and which sharply tightened in March 2013 after he and Congress failed to agree on a deficit reduction plan. Under the caps, appropriations in 2016 would be effectively frozen for a second year at about $1.017 trillion. Obama would increase that to $1.091 trillion â a $74 billion increase that would be split evenly between defense and domestic spending. Many Republicans will be reluctant to give up the leverage the caps provide, but GOP priorities like defense spending are caught in the same squeeze. Each party could have an interest, then, in some compromise. But changing the law is a tall order, one that requires Obamaâs signature on a Republican-backed bill that can get past a 60-vote point of order in the Senate. In nominal terms, the higher cap Obama requested is a level not seen since Democrats last controlled Congress in 2010. To borrow from a colorful image used by Senate Appropriations Committee Chairman Thad Cochran (R-Miss.), asking this of the GOP is a little like ârubbing the necks of roosters togetherâ before a cockfight. But when adjusted for inflation, the same number is closer to a midpoint in 2012 when Republicans held the House. And if no action is taken, the caps now in law would leave government agencies with fewer real dollars than in the last years of President George W. Bushâs presidency. Moreover, Obama has crafted his request so that two-thirds of the additional money would go to defense, veterans and international affairs â all priorities for key Republican players on the Senate Budget Committee. If new investments in cybersecurity and nondefense research and development are counted, the percentage grows even higher. Indeed, the presidentâs new populist rhetoric about âmiddle-class economicsâ seems to apply more to how he would pay for the new appropriations â not the spending itself. His budget calls for increasing taxes on capital gains, ending a loophole for inherited wealth and taxing corporate profits stashed abroad. But his appropriations requests are more down the middle. And Obama would argue that Republicans are only hurting themselves and the nation if they insist on keeping the low caps until he is gone in 2017. All this illustrates something of a turnaround for Obama himself. He arrived in the White House after the financial collapse of 2008 and felt compelled to spend heavily to try to keep the economy afloat and buy time for the Federal Reserve to stabilize the situation. But the president seemed to sour on the process and has been famously feckless toward the appropriations side of governing even as he has expanded Washingtonâs role with his health care and financial regulatory reforms. Now an 11 percent boost in revenues has seemed to embolden Obama, whose budget projects a lower deficit of $474 billion in 2016 â a fraction of what he faced in his early years. One longtime observer described the presidentâs new posture as âa sea change.â Last year at this time, Obama played with the concept of adding $55.4 billion in what was loosely billed as his Opportunity, Growth and Security Initiative. This round is much more real. Itâs as if the president woke up in November to an epiphany: The gritty world of appropriations is one arena where he still has some leverage with a Republican-controlled Congress. The much-publicized White House rollout played to the latest headlines to try to make the new spending more relevant. The budget would offer more money to fight diseases in the wake of the Ebola crisis. An estimated $1 billion is requested in new aid for Central America, about half of which would be targeted to El Salvador, Guatemala and Honduras, the three troubled countries from which thousands of children fled to the U.S. last year. The budget seeks an estimated $513.5 million â and the potential for new loan guarantees â for Ukraine, beset by Russia-backed rebels. And with foreign-based hackers in the news, it offers an 8 percent increase for cybersecurity together with the creation of a new centralized office to assess the U.S. response to threats. Obamaâs choice to speak Monday at the Department of Homeland Security was itself symbolic. The DHS appropriations bill for the current year has been the casualty of a bitter fight over immigration policy. The presidentâs request of $41.2 billion for the coming year represents an estimated $3 billion increase, including more for border security agencies. For sure, Obama doesnât forget his own climate change and education agenda. The Department of Housing and Urban Development, formerly led by the new budget director, Shaun Donovan, is promised $41 billion, a $6.2 billion increase that would help address homelessness and the cost of expiring housing vouchers for Section 8. But the $534.3 billion Obama is proposing for the Pentagon stands out most and reflects a two-part strategy for the administration. The first step is to pump up the base budget for the military. But second, Obama seeks to block the Republicans from going around the spending caps by adding off-budget dollars through the âoverseas contingency operationsâ account. OCO began as a budgeting tool for overseas military actions in Iraq and Afghanistan, but it can also pad Pentagon spending at home â a favorite GOP tool for placating its hawks. Unless Obama can close this escape route, he will have a harder time bringing Republicans to the table. Thus, his core Pentagon appropriations request goes up by 8 percent, a $38.2 billion increase to improve readiness but also to begin long-term investments in modernizing submarine and nuclear forces. Total procurement and research and development funding would grow by $20.4 billion â accounting for more than half the increase, for example, with substantial new money for the Navy. At the same time, Obamaâs OCO request for defense, which includes $5.3 billion for operations to counter the Islamic State of Iraq and the Levant, totals $50.9 billion, a $13.3 billion drop from what Congress approved in December for 2015. And the administration argues that it is time to transition back to funding the military more through the departmentâs base budget â subject to the same caps as domestic appropriations. The White House readily admits that the full $74 billion increase in the presidentâs budget is too rich for Republicans to swallow. But the bigger problem for Obama may be the offsets he proposes to cover the costs.