Top congressional Republicans declared President Obama’s tax-laden budget for fiscal 2014 dead on arrival Wednesday, saying its failure to cut deficits destroys any hope of a “grand bargain” to fix the federal government’s fiscal crisis.
The White House promoted the budget as an effort to restart negotiations on long-term deficit reduction with a mix of higher taxes on the wealthy and modest trims to entitlement programs. But House Budget Committee Chairman Paul Ryan, Wisconsin Republican, said the president’s proposals on Social Security and Medicare don’t come close to addressing the programs’ looming insolvency.
“I don’t think we should be talking about a grand bargain, because that implies that the president and Senate Democrats are ready to embrace fundamental entitlement reform, which they have shown absolutely no indication of doing,” Mr. Ryan told reporters.
Mr. Obama introduced his fiscal 2014 budget to Congress on Wednesday, a $3.77 trillion spending plan that would raise hundreds of billions of dollars in taxes and commit his administration to entitlement reform for the first time by changing the way Social Security’s cost-of-living adjustments are calculated.
Responding to Republican accusations that his budget doesn’t trim deficits as much as he claims, Mr. Obama insisted “the numbers work.”
“There’s not a lot of smoke and mirrors in here,” Mr. Obama said in the White House Rose Garden as he presented the document with Jeffrey Zients, the acting budget director.
Adding up the numbers
The budget proposal, which is nine weeks late, would replace the across-the-board “sequester” budget cuts that started March 1 with a mix of tax increases and more targeted program cuts. The blueprint also calls for more than $25 billion in specific spending cuts to 215 line items, slightly less than the $28 billion in individual program cuts that Mr. Obama sought last year.
Mr. Obama said the budget would reduce deficits by $1.8 trillion over 10 years, partly by raising $580 billion in additional revenue through closing loopholes for wealthier taxpayers and limiting tax deductions, as well as eliminating tax breaks for oil and gas companies. It would include $400 billion in budget cuts divided evenly between defense and non-defense programs.
“If you’re serious about deficit reduction, there’s no reason to keep these loopholes open,” Mr. Obama said. “When it comes to deficit reduction, I’ve already met the Republicans more than halfway. Our deficits are already falling. My budget will reduce deficits by nearly another $2 trillion … but it does so in a balanced and responsible way.”
But in an indication of how far apart the two sides are, congressional Republicans immediately countered that the president’s plan reduces deficits by only $119 billion over 10 years, when the cost of replacing the sequester cuts is factored in and the administration’s fiscal “gimmicks” are exposed.
Republican sources on the House and Senate budget committees said the administration’s own budget charts propose to trim deficits by $1.4 trillion, not $1.8 trillion. Mr. Ryan and Republican staffers said the administration is proposing largely bogus savings of $675 billion from ending the war in Afghanistan, as well as failing to offset a Medicare funding formula known as the “doc fix” ($250 billion), and failing to count the cost of extending certain refundable tax credits ($161 billion). Add up those gimmicks, Republicans said, and Mr. Obama is left with $119 billion in true deficit reductions over 10 years.
Republican budget sources said Mr. Obama’s plan would raise taxes by $1 trillion over a decade, on top of the $600 billion in increased revenue he secured as part of the “fiscal cliff” deal Jan. 1. Mr. Obama’s budget never achieves balance, with a deficit projected at $439 billion in its 10th year.
Mr. Obama also proposes to implement the “Buffett rule,” named for billionaire investor Warren Buffett, which would require households earning $1 million or more per year to pay at least 30 percent of their income in taxes.