U.S. Budget Week: Obama's Fiscal 2015 Budget Not Likely To Spur Talks

Published Mar 7, 2014. By John Shaw.

WASHINGTON (MNI) - After three years of partisan budget wars and a wary fiscal truce that was struck last December by Democrats and Republicans on Capitol Hill, few expected President Barack Obama to offer an aggressive budget this year to jump-start a fiscal debate that most assume will go nowhere.

In this respect, the president did not disappoint.

Obama released his fiscal year 2015 budget Tuesday and Treasury Secretary Jack Lew and White House budget director Sylvia Burwell defended it before congressional panels Wednesday and Thursday and will continue to do so next week.

Obama's budget proposal tacitly acknowledged he did not offer a plan designed to entice lawmakers into another round of budget talks.

"In light of congressional Republicans' unwillingness to negotiate on fundamental issues and agree to a balanced plan to deal with our long-term fiscal challenges, this year the administration is returning to a more traditional budget presentation that lays out the President's vision," one budget document said.

Obama's budget proposes $3.9 trillion in spending for FY2015, with $1.014 trillion allocated for discretionary programs. This was the amount agreed to last December by Senate Budget Committee Chairman Patty Murray and House Budget Committee Chairman Paul Ryan.

The budget endorses ideas that Obama discussed in his State of the Union speech in late January: doubling the Earned Income Tax Credit for childless adults; an Early Head Start program for infants and toddlers; renewal of emergency unemployment benefits; and 45 new manufacturing institutes.

The budget outlined more than $400 billion in ten-year savings for health care programs, with savings coming from Medicare and Medicaid and other health programs. It backed about $650 billion in additional revenues.

The administration also proposed an additional $56 billion in spending for FY2015 that would be divided between domestic and discretionary programs and offset with other spending reductions and revenue increases.

Murray, the chairman of the Senate Budget Committee, praised the Obama budget as offering a "balanced approach" that is both "fiscally responsible" and appropriately focused on economic growth.

She also praised the administration for withdrawing last year's proposal to adopt the Chained CPI. "I personally believe there are better ways to create jobs, grow the economy, and tackle our long-term fiscal challenges than this policy, and I am glad it was not included this year," she said.

Murray also backed Obama's proposal for $56 billion in additional spending - as long as it's offset.

Senate Appropriations Committee Chairman Barbara Mikulski, also a Democrat, praised Obama for embracing sound "values" with his call for additional funding, but added she can't support the proposal. "We have a budget agreement for fiscal year 2015 and the Senate Appropriations Committee will adhere to the spending caps in that deal," she said.

Congressional Republicans offered a withering assessment of Obama's budget.

"The president has offered perhaps his most irresponsible budget yet," House Speaker John Boehner said in a derision. "Spending too much, borrowing too much, and taxing too much, it would hurt our economy and cost jobs," he charged.

House Budget Committee Chairman Paul Ryan dismissed Obama's budget as a "campaign document" that failed to address the nation's central fiscal challenges.

"It would demand that families pay more so Washington can spend more. It would hollow out our defense capabilities. And it would do nothing to preserve or strengthen our entitlements. The President has just three years left in his administration, and yet he seems determined to do nothing about our fiscal challenges," Ryan said.

Several budget groups issued reports on Obama's budget and they generally concluded that it failed to confront the nation's long-term fiscal challenges.

"While there are some positive elements in the President's plan this year, overall it seems to ratify the consensus in both parties that there will be no far-reaching budget deals in the coming year. This is a campaign-year document and should be assessed as that," said Bob Bixby, executive director of the Concord Coalition in a statement.

"Given the coming elections and the complacency in Washington on the budget, however, any substantial progress on fiscal reform is likely to be extremely difficult in the year ahead," he added.

Bixby expressed disappointment the administration withdrew its Chained CPI proposal of last year, saying it's a more accurate measure of inflation that should be used in the federal budget.

The Committee for a Responsible Federal Budget also expressed regret the administration backed off its Chained CPI proposal. "Securing our entitlement programs will require more structural reforms that build on the President's prior proposals, not subtract from them," the group said in a paper.

"Given the looming insolvency of the Social Security system and growing long-term debt levels, we wish the President had instead proposed additional reforms to secure the country's entitlement reforms, rather than fewer," it added.

The Peter G. Peterson Foundation noted in its review of the Obama budget that the U.S. will incur a "staggering $5.6 trillion" in debt service costs over the next decade. By 2020, it said, debt service costs will become the federal government's third largest spending category, trailing only Social Security and Medicare.