The Issue: Plenty to love, loathe in Obama's 2014 budget

By NICOLE DEBEVEC, United Press International   |  April 14, 2013 at 4:30 AM
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Congressional Republicans and Democrats began voicing their displeasure over U.S. President Obama's 2014 budget plan, saying it didn't go far enough to cut spending or it raised taxes or it intruded too much on entitlements or left wage-earners in a lurch.

When he revealed his proposal -- more than two months after the Feb. 4 deadline -- Obama said his $1.8 trillion budget is a "fiscally responsible blueprint" that includes middle-class jobs and growth.

His budget proposed investments in infrastructure and education, new taxes for the wealthy and entitlement reforms, as well as doing away with the across-the-board cuts in federal spending, known as the sequester.

Calling his budget a "fiscally responsible blueprint," Obama said it wouldn't add "a dime to the deficits."

The majority parties in both houses already introduced their own budget blueprints.

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, said his budget would cut spending by $5.7 trillion, reduce the top tax rate to 25 percent and balance the budget within 10 years -- contracting federal spending from 22.2 percent of the economy to 19.1 percent by 2023 and making hay on many of the proposals he advanced while on the stump in 2012.

Senate Budget Committee chairwoman Patty Murray's plan, revealed soon after Ryan offered his proposal, includes nearly $1 trillion in new taxes but would not balance the budget. The blueprint also would end the sequester -- something Ryan's plan keeps in place -- replacing those spending cuts with an even mix of tax increases and spending cuts. The budget would dedicate $100 billion to economic stimulus in the form of infrastructure spending and job training, two items for which Obama called during his State of the Union address.

Among other things, Obama's inclusion of a plan to change the calculation method for the annual cost of living adjustments for Social Security and other federal programs raised some hackles. Shifting to "chained CPI" in 2013 from the current inflation measure could reduce the federal debt by $230 billion, but it also means seniors would see smaller increases in their Social Security payments each year.

"I am deeply disappointed that the president's budget includes a chained consumer price index which would mean significant cuts for Social Security and veterans. It also would raise taxes on low- and middle-income Americans," Sen. Bernie Sanders, Ind-Vt., posted on his Facebook page. "For seniors, Obama's proposal would mean that a 65-year-old retiree would lose more than $650 a year by their 75th birthday and $1,000 a year would be cut from their benefits once they reach 85."

Rep. Greg Walden, R-Ore., chairman of the National Republican Congressional Committee, told CNN Obama's plan wasn't kind to seniors.

"His budget lays out a shocking attack on seniors, if you will," Walden said.

Away from Capitol Hill, Obama's budget drew rocks and roses on a host of issues besides Social Security.

Independent Petroleum Association of America Chairman Virginia Lazenby, chief executive officer of Bretagne, LLC, in Nashville, said Obama's budget "demonstrates a fundamental misunderstanding of the American oil and natural gas industry and its tax treatment."

"Its call to repeal the industry's tax 'subsidies' mischaracterizes the industry's tax provisions and disregards the way the tax code has influenced energy development for decades," she said in a statement. "Independent oil and natural gas producers currently reinvest ... their capital budgets into new energy projects, and by doing so, they keep the economy moving. The tax treatment is crucial to the business decisions of these companies."

The conservative Heritage Foundation, the day after Obama released his budget, listed five things on its blog that followers need to know: It raises taxes by $1.1 trillion; it underfunds the Pentagon; it doubles down on the Affordable Care Act, aka Obamacare; it doesn't, and won't, balance, and "It's irrelevant."

"The president's budget is more than two months late," the foundation said. "The House and Senate have already passed their own budgets, and the next step is for the two chambers to come together to see if they can hash out a budget that both chambers can pass. At this point, why is the President bothering?"

John Arensmeyer, founder and chief executive officer of Small Business Majority, said Obama's blueprint was largely positive for small businesses, but cautioned entrepreneurs don't want cuts to Social Security as a way to lower the deficit.

"The president's 2014 budget blueprint includes key provisions small businesses support and have long been asking for, such as closing tax loopholes that benefit the wealthy and large corporations, reducing corporate tax rates in a revenue-neutral manner, offering tax credits for small-business hiring, and creating manufacturing, infrastructure and clean energy initiatives that can provide small businesses with economic opportunities and encourage job growth," Arensmeyer said in a statement.

However, he said, polling by his organization indicated small businesses support preserving Social Security.

"They don't want to see cuts to this program as a way to reduce the deficit," he said, "because consumers and small business owners will have less money to spend, which would negatively affect the economy and small businesses' bottom lines."

Patrick Jones, executive director and CEO of the International Bridge, Tunnel and Turnpike Association, said Obama was right saying, "It will take more than federal government funding for us to meet our country's transportation and infrastructure challenges."

Before his budget, Obama touted joint public-private construction projects, among other measures, to lure investment in U.S. infrastructure.

"It's clear that the old way of federal transportation funding isn't working," Jones said. "In order for us to adequately meet the infrastructure needs of our country, and to maintain safe, convenient mobility for all Americans, it is essential our leaders explore new sources of revenue such as tolling."

Concerning Obama's call to simplify the nation's tax code, Katie Vlietstra, director of Government Relations for The National Association for the Self-Employed, said her organization agreed with the budget's aim to make the tax code simpler and fairer.

"But the sad reality is our tax code is unfair for the millions of small businesses that want to grow and expand their small businesses, and even more deterring for those who want to open their own small businesses," Vlietstra said in a statement. "While job creation and closing loopholes are important, just as essential is creating the environment for new and existing small businesses to thrive without a paper trail of unnecessary and complex requirements."

While expressing dismay over some aspects of Obama's budget, AFL-CIO President Richard Trumka praised others.

"Obama budget falls short of putting our economy on a path towards higher wages and full employment. ... This austerity budget is bad economic policy at a moment when the economy remains weak and we urgently need more job-creating investments," Trumka said.

However, he praised the budget for aiming to provide "universal access to pre-kindergarten programs that are so important to our children."

"It strengthens programs to protect workers against wage theft, unsafe workplaces and employer retaliation. It closes the outrageous loophole that allows Wall Street financial managers to pay a special lower tax rate," he said. "And it reforms some of the tax loopholes that allow corporations to get away with shifting profits overseas to avoid U.S. taxes."

Back on Capitol Hill, Obama's budget strategy concerns many Democrats, warning that the president's starting position on budget negotiations might alienate the Democratic base as well as help Republicans make Obama and the Democrats own even more spending cuts.

"I'm well past the point of trying to understand what, if any, strategy is behind anything this administration does," one Democratic aide told Roll Call. "It most definitely does not outline party priorities, as evident by the reaction from the base. And it most definitely doesn't accomplish anything [in terms of] a long-term 'deal' because -- news flash -- he has tried all this before and it never got anywhere.

"The GOP has no interest in working with [Democrats] on anything," the aide said. "After a certain point, you'd think that the White House would change [things] up, but I guess we're not there yet."

White House officials reiterate Obama is willing to compromise and make tough decisions to reduce the deficit, but only in the context of a package "that has balance and includes revenues from the wealthiest Americans and that is designed to promote economic growth."

Finally, a $70 million budgetary line item allocated for small modular reactors earned the Energy Department a Golden Fleece award.

No one is knocking down doors to buy a small modular reactor, Taxpayers for Common Sense said, because there's no assurance that the electricity produced will be remotely competitive with power from other sources.

"This is supposed to be a time of great austerity in Washington," said Ryan Alexander, Taxpayers for Common Sense president. "We cannot afford to pile more market-distorting subsidies to profitable companies on top of the billions of dollars in subsidies we already give to nuclear power.

"If the industry believes in small modular reactors and a reactor in every backyard, that's wonderful ... but don't expect the taxpayer to pick up the tab."

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