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Obama to unveil budget with higher taxes, more deficits

- The Washington Times - Friday, February 10, 2012

President Obama will release an election-year federal budget Monday that is loaded with deficit spending and tax increases on the wealthy but avoids tough choices on the soaring costs of entitlements, independent analysts and Republican lawmakers say.

The president's budget request to Congress forecasts a deficit of $1.33 trillion in the current fiscal year — even higher than expected — and calls for at least $1.5 trillion in tax hikes over the next decade. By including $350 billion in short-term stimulus spending, Mr. Obama is submitting a plan that is ready-made for his re-election campaign but has no chance of passing a divided Congress.

"Honestly, my expectations couldn't be lower," said Douglas Holtz-Eakin, former director of the nonpartisan Congressional Budget Office. "He has put out budgets that lead to a death spiral. His budgets have never added up, and he has a propensity to use it as a very powerful campaign tool."

Mr. Obama is scheduled to unveil his proposal at 11 a.m. Monday at Northern Virginia Community College in Annandale.

Senior administration officials said the fiscal 2013 budget will feature a "balanced approach" to deficit reduction, in part by ending the Bush-era tax cuts for families earning $250,000 or more. The budget also will ask Congress to impose the president's "Buffett rule," named for billionaire Warren Buffett, that would require tax rates of at least 30 percent on income over $1 million.

"What we have to do is focus on the long term and the short term at the same time," White House Chief of Staff Jack Lew said Sunday on ABC's "This Week." "In the short term, we need to keep the economy growing. In the long term, we need to get the deficit under control in a way that builds the economy that can last for the future."

Sen. Jeff Sessions, Alabama Republican and ranking member of the Budget Committee, said Mr. Obama's previous budgets have been "exceedingly irresponsible" and demonstrate the president's aversion to reducing the nation's $15.3 trillion debt.

"Our systemic debt problem requires the nation to make serious choices," Mr. Sessions said. "A good leader should tell the American people what the options are. I remain baffled that the president seems unwilling to do that."

Administration officials said the budget envisions $4 trillion in deficit reductions over the next decade through a mix of tax increases, spending caps that were enacted last year, savings from ending the wars in Iraq and Afghanistan, and curbing the growth of Medicare and Medicaid.

Critics point out that Mr. Obama promised in February 2009 that he would cut a deficit of $1.4 trillion in half by the end of his first term. The deficit for the fiscal year that ends Oct. 1 — just a month before the election — will be nearly as high as when Mr. Obama took office.

Mr. Lew said on "Fox News Sunday" that administration officials didn't know how bad the recession was when Mr. Obama made that promise.

"The economy was softer than anyone knew at the time, and we had less revenue coming in, and it means there was a deeper hole to dig out of than anyone could envision" at the time, Mr. Lew said.

Mr. Sessions said Republicans remain wary of the president's math and accuse the administration of employing various budgetary "gimmicks" that forecast savings on paper but don't materialize.

For example, he said, the administration is banking on about $1 trillion in war savings over the next decade, a figure he said is inflated.

"This is not healthy; the president should submit an honest budget," Mr. Sessions said.

Even the president's supporters say his budget isn't likely to advance big-ticket proposals in an election year with a divided Congress. Its main value, they say, is in drawing the lines of debate about the nation's priorities leading up to the November election.

"There's very little chance that anything big or significant is going to get enacted," said James Horney, vice president for federal fiscal policy at the liberal-leaning Center on Budget and Policy Priorities. "What's most likely is we'll have a lively debate. It's valid for the president to put out [an agenda] and say, 'Here's a crucial issue and here's how I think we should deal with it.' "

Mr. Horney praised the president's approach toward gradual deficit reduction "in a way that allows that we have enough resources to meet the needs of the country."

He said the budget will become important in the fall as lawmakers decide the appropriations for various programs, because many of Mr. Obama's requests for specific spending levels will win the day.

But the impact of Mr. Obama's previous budgets has been diluted by the Senate's failure to adopt them. Senate Republicans point out that Democratic leaders haven't approved a budget in more than 1,000 days, and Senate Majority Leader Harry Reid, Nevada Democrat, has said he won't bring up the new budget for a floor vote.

Mr. Reid said there is no need to do this because the agreement last summer on raising the debt ceiling set spending levels for this year.

On CNN, Mr. Lew blamed Senate Republicans for the failure to pass budgets. "You can't pass a budget in the Senate of the United States without 60 votes," he said.

Mr. Lew's statement is incorrect, however. Although many details of an approved budget may take 60 votes, the budget itself requires only 51 votes, or just 50 with a friendly vice president, to pass.

Regardless, Mr. Holtz-Eakin, president of the nonprofit American Action Forum, said the federal budget is an important blueprint for the nation's priorities and that Mr. Obama is failing to use it to set a sustainable, responsible path forward on the biggest questions of the day such as shoring up Social Security and Medicare.

"The budget is the policy of the U.S. government," said Mr. Holtz-Eakin, who served as chief economist to Republican President George W. Bush and was director of the CBO during Mr. Bush's presidency. "He's missing in action. It's very frustrating."

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