Obama crafts budget plan around election issues
$1.3 trillion deficit forecast this fiscal year
WASHINGTON - President Obama will lay out a budget blueprint Monday that amounts to an election-year bet that a plan for higher taxes on the rich and more spending on popular programs like infrastructure and manufacturing will trump concerns over the deficit.
The new budget proposal contrasts with the deficit-cutting promises that attended the budget rollout last year and the debates that followed. Figures released yesterday indicate that the White House foresees a slightly higher deficit in the current fiscal year than the $1.3 trillion deficit of the 2011 fiscal year, even after the budget battles that dominated Washington last year.
The deficit is projected to fall to $901 billion in the fiscal year that starts in October, the first time since 2008 that the red ink would be below $1 trillion. But last year, the White House had projected the 2013 deficit dropping further, to $768 billion.
Under White House projections, the deficit would reach $575 billion in 2018, or 2.7 percent of the economy, before rising again to $704 billion in 2022, or 2.8 percent.
The highlights of the plan for the 2013 fiscal year may not be those bottom-line figures but the spending inside.
As Democrats promote the revival of manufacturing, the president will call for an additional $2.2 billion for advanced manufacturing research and development, a 19 percent leap over the current year. In all, Obama will seek a 5 percent increase in nonmilitary research spending.
For more immediate job programs, the White House will urge $350 billion in short-term job spending, as well as a six-year transportation and infrastructure program that would cost $476 billion. He will ask for $60 billion to refurbish at least 35,000 schools and help state and local governments hire and retain teachers, firefighters, and police officers.
Tens of billions of dollars have already been spent on such efforts through the stimulus program passed in 2009, and Republicans in Congress - intent on calling the first effort a failure - are not about to embark on a new round.
But the latest budget document can be seen as more a platform for the president’s reelection campaign than a legislative proposal for budget debates that will begin next week. The budget will call for a 10-year, $61 billion “financial crisis responsibility fee’’ to hit the largest financial companies and a tax overhaul referred to as “everyone pays their fair share.’’
Congressional leaders of both parties have vowed to pursue an overhaul of the tax code. But Obama’s version includes proposals that have been partisan flashpoints. His version pushes for the elimination of “unfair tax breaks for millionaires.’’ The current alternative minimum tax - which hits some middle-class families - would be scrapped in favor the president’s “Buffett rule,’’ named after billionaire investor Warren Buffett and devised to ensure that households earning more than $1 million a year pay no less than 30 percent of their income in taxes.
The budget document calls for a simpler tax code with lower rates, but the president also wants a tax overhaul to cut the deficit by $1.5 trillion through 2022 and allow President George W. Bush’s tax cuts to expire for families earning more than $250,000 a year.
New spending and targeted tax increases seem far more gaudy than the $638 billion in spending cuts the White House is claiming over 10 years from health programs like Medicare and Medicaid, agriculture subsidies, and federal worker retirement funds.
In all, the White House is boasting of more than $4 trillion in “balanced deficit reduction’’ in the package over 10 years, a figure that includes $1 trillion in spending cuts agreed to last year after a series of confrontations with congressional Republicans.