This article is from the source 'washpo' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.washingtonpost.com/business/economy/obama-may-have-new-leverage-with-his-4-trillion-budget-request/2015/02/02/799be914-aaf2-11e4-ad71-7b9eba0f87d6_story.html?wprss=rss_homepage

The article has changed 6 times. There is an RSS feed of changes available.

Version 0 Version 1
Obama may have new leverage with his $4 trillion budget request Obama may have new leverage with his $4 trillion budget request
(about 1 hour later)
President Obama’s $4 trillion budget request is packed with familiar-looking plans to hike spending and raise taxes on the wealthy. But with Republicans newly in control of Congress and eager to avoid more economy-shaking gridlock, the request kicks off a long negotiation in which the president may have new leverage. President Obama’s $4 trillion budget request is packed with familiar-looking plans to hike spending and raise taxes on the rich. But with Republicans newly in control of Congress and eager to end an era of political gridlock, the request kicks off a long negotiation in which the president may have new leverage.
With the economy finally on the mend and federal deficits falling, Obama’s request proclaims an end to “mindless austerity” and seeks fresh investments in education and tax breaks for a struggling middle class. It would lift caps on spending for the Pentagon as well as domestic agencies. And it seeks a big infusion of cash for highways and other infrastructure. With the economy finally on the mend and federal deficits falling, Obama on Monday proclaimed an end to “mindless austerity.” His budget request seeks new investments in education and tax breaks for a struggling middle class. It would lift caps on spending for the Pentagon as well as domestic agencies. And it seeks a big infusion of cash for highways and other infrastructure projects.
These echo the priorities of many Republican lawmakers, who are torn between their pledge to shrink government spending and borrowing and their desire to demonstrate an ability to govern, in part by increasing funding for the nation’s defense. Republican leaders have also pledged to avoid another government shutdown — which means finding common ground with Obama on agency appropriations before the new fiscal year begins Oct. 1. Those proposals echo the priorities of many Republican lawmakers, who are torn between their pledge to shrink government spending and their desire to demonstrate an ability to govern, in part by increasing funding for the nation’s defense. Republican leaders have also vowed to avoid another government shutdown — which means finding common ground with Obama on agency appropriations before the new fiscal year begins Oct. 1.
On Monday, Republicans focused more closely on divisions with the administation than on potential areas of agreement. In a joint statement, the chairmen of the House and Senate Budget Committees rejected the president’s request as “the same tired agenda that has failed to deliver for American families.” On Monday, Obama adopted an aggressive tone, warning Republicans not to put politics ahead of the country’s national security. He pointedly vowed to use the veto if Republicans refuse to jettison sharp, automatic budget cuts known as “sequestration.”
“I am not going to accept a budget that locks in sequestration going forward,” Obama said in an appearance Monday at the Department of Homeland Security’s National Operations Center. “I want to work with Congress to replace mindless austerity with smart investments that strengthen America. And we can do so in a way that is fiscally responsible.”
Obama also chastised Congress for withholding funds from the the Deparrtment of Homeland Security. Republicans, angry with the president over an executive action that would let as many as 5 million undocumented immigrants stay in the country, have so far funded the agency only through the end of this month.
“Don’t jeopardize our national security over this disagreement,” Obama said.
Republicans, meanwhile, focused their fire on areas of Obama’s budget request that have no hope of passage in a GOP Congress, including longstanding proposals to increase the estate tax and to raise $640 billion over the next decade by limiting tax breaks for the nation’s wealthiest households.
“The President is asking for billions in additional spending without any realistic way of paying for it,” said House Appropriations Committee chairman Harold Rogers (R-Ky.). “The White House knows that its proposed tax increases and other budget gimmicks will never be enacted into law.”
In a joint statement, the chairmen of the House and Senate Budget Committees derided the president’s request as “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,” said the statement from Rep. Tom Price (R-Ga.) and Sen. Mike Enzi (R-Wyo.). “A proposal that never balances is not a serious plan for America’s fiscal future.”“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,” said the statement from Rep. Tom Price (R-Ga.) and Sen. Mike Enzi (R-Wyo.). “A proposal that never balances is not a serious plan for America’s fiscal future.”
After years of political battles over the nation’s $18 trillion debt, Obama’s request does seek to further slow borrowing. But instead of tackling the biggest drivers of federal spending – Social Security and federal health programs – Obama proposes to raise taxes on the wealthy and bank new revenue from immigration reform. After four years of political strife over the nation’s $18 trillion debt, administration officials have rejected calls to balance the budget, arguing that it is unnecessary for the nation’s economic health.
Gone is a previous White House proposal to slow Social Security spending by adopting a less-generous measure of inflation for cost-of-living increases, known as the chained Consumer Price Index – an idea lauded by Republicans but hated by Obama’s fellow Democrats. “The key test of fiscal sustainability is whether debt is stable or declining as a share of the economy, resulting in interest payments that consume a stable or falling share of the Nation’s resources over time,” the budget document says, adding that the president’s proposal “meets that test.”
And while Obama proposes to cut spending on federal health programs by roughly $430 billion over the next decade, the bulk of those savings would come from reducing payments to providers – particularly pharmaceutical companies – rather than cutting benefits, as Republicans prefer. The debt, while still growing under the president’s proposals, would be growing more slowly than the overall economy, with debt held by outside investors falling from 75 percent of gross domestic product this year to 73.3 percent in 2025.
To achieve that goal, Obama proposes to raise taxes and bank new revenue from immigration reform rather than cutting spending. And while Republicans are calling for a renewed effort to tackle the rising cost of entitlement programs, including Social Security, Obama’s budget backs away from his previous offer to slow Social Security spending by adopting a less-generous measure of inflation for cost-of-living increases, known as the chained Consumer Price Index.
Obama does propose to cut spending on federal health programs by roughly $430 billion over the next decade. But the bulk of those savings would come from reducing payments to providers – particularly pharmaceutical companies – rather than cutting benefits, as Republicans prefer.
Obama’s most significant proposal for benefit reductions is a proposal to raise Medicare premiums for wealthier retirees. Meanwhile, he proposes to cut payments to providers of post-acute care, saving $102 billion over ten years, at a time when a growing portion of the nation’s population is elderly.Obama’s most significant proposal for benefit reductions is a proposal to raise Medicare premiums for wealthier retirees. Meanwhile, he proposes to cut payments to providers of post-acute care, saving $102 billion over ten years, at a time when a growing portion of the nation’s population is elderly.
Obama also would cut payments to pharmaceutical companies under Part D of Medicare, bringing Medicare payments in line with those paid by Medicaid and saving $116 billion over 10 years. The administration says it is “deeply concerned with the rapidly growing prices of specialty and brand name drugs.”Obama also would cut payments to pharmaceutical companies under Part D of Medicare, bringing Medicare payments in line with those paid by Medicaid and saving $116 billion over 10 years. The administration says it is “deeply concerned with the rapidly growing prices of specialty and brand name drugs.”
As a result, Obama’s policies would add about $5.7 trillion to the debt over the next decade (compared with nearly $8 trillion under current law), with the portion of the debt held by outside investors rising to $13.5 trillion this year to $20.3 trillion in 2025. As a result, Obama’s policies would add about $5.7 trillion to the debt over the next decade (compared with nearly $8 trillion under current law), with the portion of the debt held by outside investors rising from $13.5 trillion this year to $20.3 trillion in 2025.
This is a victory, the White House argues in its budget message, because the debt, while still growing, would be growing more slowly than the overall economy, thus “putting the nation on a sustainable fiscal path.” Under the presidenti’s proposal, debt held by outside investors would fall from 75 percent of gross domestic product this year to 73.3 percent in 2025. Meanwhile, interest payments would climb to nearly $800 billion a year by 2025 – more than Obama proposes to spend on any program that year other than Social Security and Medicare.
“The key test of fiscal sustainability is whether debt is stable or declining as a share of the economy, resulting in interest payments that consumer a stable or falling share of the Nation’s resources over time,” the budget says. “The Budget meets that test, showing that investments in growth and opportunity are compatible with also putting the Nation’s finances on a strong and sustainable path.” Republicans, for their part, have pledged to wipe out deficits entirely by 2025, in part by crafting far-reaching proposals to rein reining in federal health and retirement spending. Price has declared his intention to directly tackle Social Security spending, an area his predecessor, Rep. Paul Ryan (R-Wisc.), studiously avoided in his budgets over the past four years.
Still, interest payments would climb to nearly $800 billion a year by 2025 – more than Obama proposes to spend on any program other than Social Security and Medicare. Republicans have pledged to wipe deficits entirely by 2025, in part by crafting far-reaching proposals to rein reining in federal health and retirement spending. Meanwhile, Ryan, who now chairs the tax-writing House Ways and Means Committee, has vowed to advance his own proposals for reducing spending on health care, including subsidies under Obama’s Affordable Care Act. Ryan said he also intends to unveil a comprehensive plan for overhauling federal tax laws once he has exhausted efforts at compromise with the administration.
Price has declared his intention to directly tackle Social Security spending, an area his predecessor, Rep. Paul Ryan (R-Wisc.), studiously avoided in his budgets over the past four years. “I want to work with this administration, and I hope that we can find common ground. But the President has to demonstrate that he’s interested in governing, not just posturing,” Ryan said in a statement. “I hope the president is willing to rethink his tax-and-spend approach so we can get things done for the American people.”
Meanwhile, Ryan, who now chairs the tax-writing House Ways and Means Committee, has vowed to advance Republican proposals for tackling health spending, including subsidies under Obama’s Affordable Care Act. Ryan said Sunday that he also plans to unveil his own comprehensive plan for overhauling federal tax laws once he has exhausted efforts at compromise with the administration. Obama’s budget request offered little in the way of compromise on the tax front Monday. His proposals are largely torn from the pages of old playbooks and face a wall of opposition from Congress, business groups and wealthy Americans who have successfully defeated many of the same proposals in the past.
Obama’s tax proposals are largely torn from the pages of old playbooks and face a wall of opposition from Congress, business groups and wealthy Americans who have successfully defeated many of the same proposals in the past. His business tax reform plan – the ripest area for compromise with Republicans – would lower the corporate tax rate to 28 percent from 35 percent by closing so-called “loopholes” for targeted constituencies. For example, Obama wants to eliminate tax breaks for the oil and gas industry totaling $45.5 billion over the next decade, as well as $4.3 billion in preferential tax benefits for the coal industry, which has a close ally in Senate Majority Leader Mitch McConnell (R-Kty.).
His business tax reform plan – the ripest area for compromise with Republicans – would lower the corporate tax rate to 28 percent from 35 percent by closing so-called “loopholes” for targeted constituencies. For example, Obama wants to eliminate tax breaks for the oil and gas industry totaling $45.5 billion and $4.3 billion of preferential tax benefits for the coal industry, which has a close ally in Senate Majority Leader Mitch McConnell (R-Kty.). Obama’s business tax reform proposal also calls for a new 19 percent tax on all profits earned overseas, a proposal that would bring in $206 billion over ten years. But that level of taxation is likely to be viewed as too high by influential corporations, each with tens of billions of dollars accumulated abroad, and by lawmakers already fearful that those companies might move their headquarters to other countries with lower corporate tax rates.
The business tax reform proposal also assumes that a new long-term 19 percent tax on foreign profits would bring in $206 billion over ten years, a tax level that will be seen as too high by influential major corporations, each with tens of billions of dollars accumulated abroad. Other money-raisers in Obama’s budget include a new 0.07 percent fee on the liabilities of banks and insurance companies with more than $50 billion in assets, about 100 institutions. That item would bring in $111.8 billion over the next decade.
There’s also likely to be further opposition from the financial services industry over a proposal imposing a 0.07 percent fee on the liabilities of banks and insurance companies with more than $50 billion in assets, about 100 institutions altogether. That item would bring in $111.8 billion. And there’s nearly $190 billion in fresh taxes on inherited estates. The proposal affects a very small number of the nation’s wealthiest people, but is staunchly opposed by Republicans as a “death tax.”
Obama’s budget also counts $189.3 billion in higher revenues from changing estate taxes, expanding the amount of inheritance subject to taxation by lowering tax brackets. This affects a very small number of the nation’s wealthiest people, but the issue of estate taxes – or “death taxes” as its opponents call it – has been a stumbling block in the past. With the release of the president’s request, action now shifts to Capitol Hill, where Price and Enzi have pledged to move a GOP budget blueprint through both chambers by mid-April.
Greg Jaffe contributed to this report.
Related:Related:
Key questions and answers about Obama’s new budgetKey questions and answers about Obama’s new budget
Presidential budget predictions are almost always wrongPresidential budget predictions are almost always wrong
How the government’s budget compares to your family’sHow the government’s budget compares to your family’s