February 21, 2014

Obama’s latest budget drops Social Security cuts

In a bow to politics in Washington and to midterm elections, President Barack Obama will propose a new budget that would increase spending on popular programs and drop a plan to slow the growth of Social Security benefits that had angered his party’s base.

In a bow to politics in Washington and to midterm elections, President Barack Obama will propose a new budget that would increase spending on popular programs and drop a plan to slow the growth of Social Security benefits that had angered his party’s base.

The budget, to be unveiled March 4, will urge $56 billion in new spending split between the Pentagon and domestic initiatives such as early childhood education, job training and manufacturing help that are popular with Democratic voters. All would be financed by tax increases or other offsets, making them unlikely to pass Congress but still a ready tool for Democratic candidates to use in congressional elections this fall.

Obama will drop a year-old proposal to trim benefit increases for Social Security recipients and veterans. The offer was always paired with a demand that the wealthy pay higher taxes, but Republicans never agreed to that.

Obama had no deal with the right, and he angered the left by even offering to curb entitlement growth. On Thursday, the left cheered and predicted an energized party base heading into elections.

“This is a huge progressive victory and greatly increases Democratic chances of taking back the House and keeping the Senate,” said Stephanie Taylor, co-founder of the Progressive Change Campaign Committee, a liberal policy group. “Now the White House should join [Massachusetts Democratic Sen.] Elizabeth Warren and others in pushing to expand Social Security benefits to keep up with the rising cost of living.”

Republicans criticized both ideas.

“We hope the president submits a budget with real solutions instead of more spending, higher taxes and dangerous levels of debt,” said Kevin Seifert, a spokesman for House Budget Committee Chairman Paul Ryan, R-Wis.

Brendan Buck, spokesman for House Speaker John Boehner, R-Ohio, said: “This reaffirms what has become all too apparent: The president has no interest in doing anything, even modest, to address our looming debt crisis. With three years left in office, it seems the president is already throwing in the towel.”

White House aides unveiled the broad brush strokes of the budget weeks before the formal proposal.

Spokesman Josh Earnest said Obama will urge the new spending as part of an “opportunity growth and security initiative.”

It would include money for manufacturing institutes, preschool education and a contest among states to spur energy efficiency, according to two senior administration officials who are familiar with the proposal but not authorized to speak publicly as a matter of White House practice.

The president will recommend paying for the proposals by closing tax loopholes and “spending reforms,” but the officials declined to outline specific recommendations except to confirm that Obama will suggest raising the cigarette tax to finance preschool programs.

In a change of negotiating style, Obama will return to a “traditional way of budgeting” when he unveils a spending plan that solely reflects his priorities, one of the officials said. He will abandon the approach of publicly offering the curbs in growth of entitlement benefits as part of a package, only to end up with no deal.

The White House said it will discuss entitlement spending if Republicans first signal their willingness to consider tax increases on the wealthy — a move that would anger the GOP base.

“The president was willing to step forward and put on the table a concrete proposal,” Earnest said. “Unfortunately, Republicans refused to even consider the possibility of raising some revenue by closing some loopholes that benefit only the wealthy and the well-connected.”

The White House also suggested that a dropping deficit eases the pressure for dramatic reductions in entitlement spending. At the end of 10 years, Earnest said, the deficit will drop to 2 percent of the overall economy, according to White House forecasts that will be included in the budget proposal.

“There’s more that we can do,” Earnest said. “But … the deficit in this country has been declining at the fastest rate since the end of World War II.”

In its recent 10-year budget outlook, the nonpartisan Congressional Budget Office said deficits will double to more than $1 trillion within a decade if current law remains the same.

To save $230 billion over 10 years, Obama had proposed adopting a new way of calculating benefit increases that assumes consumers don’t always pay higher prices for products but rather substitute with cheaper alternatives. The net result is a lower inflation rate than measured by the conventional consumer price index.

Thursday’s announcement came as Democrats fight to hold seats in the congressional elections, with the healthcare law a likely hindrance. Immediately, one party leader used it to appeal to seniors, whose steady votes are sought in low-turnout midterm elections.

“I commend President Obama for his commitment to keeping Social Security strong and for rejecting Republican calls to cut badly needed cost-of-living increases,” said Senate Majority Leader Harry Reid, D-Nev.

Related content



Editor's Choice Videos