Obama's budget: 5 things to watch

Obama's budget: 5 things to watch
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President Obama on Monday will pitch his second-to-last budget blueprint to Congress.

Since early January, the administration has been leaking out, piece-by-piece, some major requests that will be wrapped into the budget. The costings will cover the 2016 fiscal year, which begins in October.

The president’s ideas will include offering two years of free community college, expanding tax credits for child care and spouses who work, and funding to help Central America following last year’s border crisis. To cover those expenditures, Obama will propose $320 billion in tax hikes over the next decade.

Below are five things to watch.

 

BUSTING SEQUESTRATION

Obama will ask Congress to increase discretionary spending by $74 billion — or 7 percent — above sequestration budget caps set by the Budget Control Act of 2011. Under the plan, domestic programs would get $530 billion and the Pentagon’s baseline budget would be $561 billion. The level of proposed mandatory spending for entitlement programs remains unclear, however.

 

SURPRISES, SURPRISES

Six years into his presidency and with so many details leaked in advance, Monday’s budget announcement could be anticlimactic. 

But there’s also the chance that the administration has kept a few cards up its sleeve.

The president could present a much more detailed framework for corporate tax reform, said Ed Lorenzen, a senior adviser at the Committee for a Responsible Federal Budget and a veteran of the budget process on Capitol Hill.

In 2012, the White House released a white paper that outlined general principles about corporate tax reform, Lorenzen said, but it’s been moot since then.

“I don’t expect them to have a complete, comprehensive corporate tax proposal out there, but does he provide some sort of framework of what he thinks corporate tax reform should look like to give some direction to Congress?” he wondered.

The Highway Trust Fund could be another area where Obama lays down a negotiating marker. The fund, which subsidizes infrastructure projects and is funded through the gas tax, is expected to run out by May. Republicans have already ruled out raising the tax rate.

“In the past, [Obama has] talked about using some of the temporary revenues from tax reform to shore up the Highway Trust Fund, and there’s been similar comments made by Republicans on the Hill,” Lorenzen pointed out.

 

WHAT’S NOT THERE?

An alternative formula used to reduce Social Security benefits, called chained consumer price index (CPI), won’t be in the budget, Sen. Bernie Sanders (I-Vt.) confirmed recently. Obama dropped chained CPI from his budget last year after congressional Democrats pleaded with him to abandon the idea, which finds more favor with Republicans. 

It did appear in his fiscal 2014 budget.

Significant spending commitments for energy conservation will probably also be excluded, Lindsay Koshgarian, research director at the National Priorities Project, said. In Obama’s fiscal 2014 budget request — that is, the proposal unveiled two years ago — Obama asked for $7.9 billion for energy conservation, which included an enormous increase for a home-energy rebate program. Koshgarian said she’d be surprised if that concept is resurrected this year.

 

MANDATORY MONEY, MILITARY MONEY

Since 2009, Obama has proposed less and less for discretionary spending. Mandatory spending for entitlement programs, by contrast, has been rising.

“He’s been very parsimonious,” Stan Collender, executive vice president at Qorvis Communications, said. “Mandatory spending has been going up — not because of new proposals that he’s made, but because of demographic and economic changes.”

As for the Pentagon, Republicans might like what they see. Todd Harrison, senior fellow for defense budget studies at the Center for Strategic and Budgetary Assessments, said Obama’s budgets have gradually gone down, but not this time.

“The FY 2016 budget request diverges a little — it goes back up — so it breaks the trend,” Harrison said.

While Obama has previously proposed cutting back on defense and shrinking the military, Harrison says administration officials are having a change of heart.

“I think reality is kind of setting in on what the consequences would really be, and how a shift in strategy would be needed to accommodate the lower budget levels. They don’t want to accept that risk. So they’re pushing back,” he said.

 

DEAD ON ARRIVAL?

Republicans have already been blasting some of the leaked proposals, from the tax plan to the one for community colleges, and experts agree Obama is using the opportunity to send a political message.

“That is the real point of a presidential budget in a situation like this. The president is basically going to put out a budget that if I were king — or queen in the future — this is what I would do,” Collender said. “This is what a Democratic president and Democratic Congress would put together and this is what you’re not going to get because the Republicans are going to block it.”

Lorenzen, however, pointed out that the president’s budget serves a useful purpose for appropriators in Congress each year because it contains line-by-line details of agencies’ needs.

“The president’s budget isn’t dead on arrival for the Appropriations Committee,” he said.

“It’s true that the overall framework and the major initiatives in the president’s budget are going to be rejected by the majority in Congress but a lot of the details and specifics are going to shape and inform the budget process for the rest of the year.”

Read more from The Hill: 

Obama to unveil $4 trillion budget that busts spending limits