Let's start with the good news. For just the second time in six years, President Obama submitted his annual budget request on time today, unveiling his fiscal blueprint in a speech at the Department of Homeland Security (not a coincidental venue, by the way). Conn ran through some of the big ticket takeaways from the proposal in a must-read post this afternoon. The president's plan calls for the highest level of federal spending ever, blows through previously agreed-upon budget caps, raises taxes by more than $2 trillion, and never comes close to balancing. According to the House Budget Committee, Obama's FY 2016 budget would add $8.5 trillion to the national debt over the next decade, while doing nothing of significance to rein in America's biggest fiscal threat: Runaway, unsustainable unpaid-for promises on entitlement programs -- which Obama has acknowledged as a major problem. In other words, this latest offering is par for the course. Katie reminds us that Team Obama habitually serves up unrealistic duds on the budgetary front. Several recent iterations have been unanimously or nearly unanimously rejected by Congress, with the White House actually encouraging Democrats to vote against the president's plan, effectively fulfilling the textbook definition of cynicism. Republican leaders on both sides of Capitol Hill have already signaled that the 2016 version of Obama's fiscal vision is a complete non starter. John Boehner:
“Today President Obama laid out a plan for more taxes, more spending, and more of the Washington gridlock that has failed middle-class families. It may be Groundhog Day, but the American people can’t afford a repeat of the same old top-down policies of the past. Like the president’s previous budgets, this plan never balances – ever. It contains no solutions to address the drivers of our debt, and no plan to fix our entire tax code to help foster growth and create jobs. Worse yet, President Obama would impose new taxes and more spending without a responsible plan to honestly address the big challenges facing our country."
“President Obama promised in the State of the Union to deliver a budget filled with ‘ideas that are practical, not partisan.’ Unfortunately, what we saw this morning was another top-down, backward-looking document that caters to powerful political bosses on the Left and never balances—ever. The new Congress will focus on ways to help the Middle Class instead as we work to pass the serious kind of budget all Americans deserve: one that roots out and reforms wasteful spending, and that aims to grow Middle-Class jobs and opportunity instead of Washington’s bureaucracy. We’re asking the President to abandon the tax-and-spend ways of yesterday and join us in this practical and future-oriented approach.”
House and Senate Budget Committee Chairmen Rep. Tom Price and Sen. Mike Enzi:
“Our nation is on a fiscal and economic path that is simply unsustainable. Failed policies and stale thinking in Washington are contributing to a growing mountain of debt and an underperforming economy. That’s why it’s so disturbing that President Obama has submitted yet another budget proposal that is focused on the same tired agenda that has failed to deliver for American families. The president is advocating more spending, more taxes and more debt. As we have seen over the past several years, that approach will yield less opportunity for the middle class and a crushing burden of debt that threatens both our future prosperity and our national security. A proposal that never balances is not a serious plan for America’s fiscal future. Especially when we have to borrow money just to afford the programs we already have.
There's a good reason why the GOP is emphasizing the fact that Obama's road map never balances: A large majority of Americans believe the federal government should be required to balance its books each year. Pointing out that the president's math is conducted in nothing but red ink, now and well into the future, underscores its recklessness. Recent Republican budgets have proposed important entitlement reforms, controlled (but didn't reverse) overall spending growth, and balanced within the decade. The party's FY 2016 outline will be unveiled in the coming weeks. According to White House accounting, the federal deficit would hover around half-a-trillion dollars for several years under Obama's plan, then head north as the ten-year budget window closes. Nonpartisan CBO projections predict that annual shortfalls will once again hit $1 trillion by 2025. The president has been boasting of substantial deficit reduction over the last few years, prompting questions like the one I received on Twitter earlier:
@yesitskenneth deficits vs debt--deficits exploded in 1st O term, have fallen from historic highs (but remain high, projected to go back up)— Guy Benson (@guypbenson) February 2, 2015
@yesitskenneth nat'l *debt* is accumulation of deficits/interest/red ink...gone nowhere but up up up.— Guy Benson (@guypbenson) February 2, 2015
This sort of confusion is exactly what the White House is shooting for. Many people use "deficits" and "national debt" as interchangeable shorthand for the same phenomenon. In reality, they have two distinct definitions, which explains why the White House fixates on the former measure, and totally ignores the latter. And again, their chest-thumping on deficits only seems impressive if you're ignorant of this context:
Two more points on the president's announcement:
(1) As an element of his seven percent spending increase request, Obama is asking for nearly half-a-trillion in new infrastructure spending over the next six years. Though conservatives can and should support some public works projects in principle as appropriate functions of government, it's hard to cut the administration much slack when they've already borrowed and spent $825 billion on a law that entailed supposed "shovel-ready" infrastructure tasks that never materialized. They haven't earned taxpayers' trust. The president's infrastructure priorities also seem suspect when he's conspicuously standing in the way of one such project that requires zero federal spending. Keystone is a popular, job-creating, privately-funded endeavor, and Obama has promised to veto it. This is incoherent.
(2) After coining the phrase "middle class economics," Obama dropped a budget that taxes middle class families' college savings accounts for the first time (which has since been abandoned), and actually slightly increases the average middle-class earner's tax burden, according to the Tax Policy Center. CNN Money reports:
It's tough to gauge how the tax plan would actually help the middle class because the averages can be deceiving. Many people on both sides of the aisle pounced on the center's recent analysis that showed middle income people, making between $49,000 and $84,000, would pay an extra $7 in tax, on average...the center added an average $19 tax bill to everyone in that bracket to account for a tax on banks, which ultimately is borne by all Americans...Far fewer middle class single and elderly taxpayers would benefit from Obama's plan. Only 12.5% of single filers would get a tax cut. Overall, this group would see a $61 increase, because nearly 7% of middle class singles would see their taxes go up and that skews the overall average. Among the elderly, only 10% would enjoy a dip in their taxes. But because many in this group would be hit with another of the president's provisions -- that would require estates to pay capital gains on appreciated assets -- they would pay an additional $152, on average.
The president has broken his tax pledge vis-a-vis working and middle class voters numerous times throughout his term in office. I discussed these issues on Fox Business Network's Varney & Co. earlier: