Obama Plan Gives Fiscal Debate Energy And Confusion

Published Apr 12, 2013. By John Shaw.

WASHINGTON (MNI) - President Barack Obama formally unveiled his fiscal year 2014 budget this week and his plan had the unusual effect of dividing congressional Democrats and Republicans while also injecting energy into the search for a modest-sized deficit reduction package this summer.

Most congressional Democrats praised the Obama budget, but some expressed unease with the president's support of implementing the chained CPI and means-testing some aspects of the Medicare program.

Republican leaders scorched the Obama budget as both tardy and timid, but several specifically praised the president for his proposals on the chained CPI and Medicare.

Budget experts say the fiscal debate appears to have been extracted from the rut it has been mired in for some time by Obama's new budget.

"I was pleasantly surprised by the president's budget," said Bob Bixby, executive director of the Concord Coalition.

"It's not a perfect budget by any means. But it put some things on the table that need to be on the table. I think it moved the debate forward and gives members of Congress a lot to think about and debate about. But it's unclear if Congress will be willing to act. Budgeting is hard. There are difficult choices," he added.

Bill Frenzel, a former Republican congressman and now a guest scholar at the Brookings Institution, also argued that Obama's budget has energized the fiscal debate.

"It seems to me that for the first time, the president is leading a potentially constructive discussion about fiscal policy," said Frenzel.

"I don't think the conditions are right for a Grand Bargain this year, but I think there is the chance for a medium-sized deal in connection with the debt ceiling vote this summer," Frenzel adds. He adds that a deficit reduction package of between $1.5 trillion and $2 trillion over a decade is possible to imagine.

Obama introduced his FY'14 budget Wednesday, arguing it balances the imperatives of deficit reduction and economic growth.

Obama's new budget includes a renewal of the $1.8 trillion deficit reduction offer over a decade which he made to Republicans late last year during the fiscal cliff negotiations.

This offer calls for $580 billion in additional revenues, $400 billion in health care entitlement savings, $230 billion in savings by implementing the chained CPI, $200 billion in other entitlement savings, $200 billion in discretionary savings and $210 billion in reduced interest costs.

The Republican response to the Obama budget was mixed, with both House Speaker John Boehner and Senate Minority Leader Mitch McConnell blasting the overall plan. McConnell said the Obama budget was "for the most part, just another left-wing wish list."

But McConnell also praised Obama for including the chained CPI. "The president seem prepared to finally concede this time that at least something needs to be done to save entitlements from their inevitable slide toward bankruptcy. I'm glad to see him begin to come to grips with the math here," he said.

House Budget Committee Chairman Paul Ryan also blasted the Obama budget as a timid plan that does not confront the nation's key fiscal problems. But he signaled that it might provide the basis for reaching some kind of medium-sized deficit agreement later in the year.

"At least everybody put a plan on the table. We hope to have a healthy clarifying budget debate. My goal is to find, where we can, common ground," Ryan said.

He added this would best be accomplished through a congressional conference committee that reconciles the House GOP budget he wrote and the Senate Democratic budget drafted by Sen. Patty Murray, the chairman of the Senate Budget Committee.

"A conference report is a great vehicle, probably the best one, to do that," Ryan said.

House Majority Leader Eric Cantor also signaled there may be a chance for some fiscal progress. "We've got some things on the table that maybe we can start to discuss," Cantor said.

Treasury Secretary Jack Lew told the Senate Finance Committee Thursday that Obama budget was designed to appear to the "sensible center" in Congress and "increase the likelihood" of a bipartisan fiscal accord.

But Lew emphasized that the White House will only agree to adopting the chained CPI and various Medicare reforms in the context of "an overall balanced agreement" that includes additional revenues.

--MNI Washington Bureau; tel: +1 202-371-2121; email: [email protected]