President Obama finally presented his 2014 budget Wednesday, and the coverage has been mostly favorable, except on the progressive left and the Tea Party right.
Progressives were enraged at the president for changing the way cost-of-living increases are calculated for Social Security payments, effectively cutting benefits over time. That was a Republican idea the president floated in budget negotiations with House Speaker John Boehner late last year.
The president also proposed $370 billion in cuts to Medicare over the next decade. Some of those savings would come from having wealthier seniors pay higher premiums and cutting payments to drug companies.
Republicans shrugged it off. Speaker Boehner said the president deserves “some credit for some of the incremental entitlement reforms that he has outlined in his budget. But I would hope that he would not hold hostage these modest reforms for his demand for bigger tax hikes.”
The president said:
When it comes to deficit reduction, I’ve already met Republicans more than halfway.
Well, that depends on your perspective. The president’s budget would cut $1 trillion in spending and raise $800 billion in revenue over the next decade, close to the breakdown Sen. Patty Murray (D-Wash.) proposed in the Democratic budget that passed the Senate.
It’s vastly different, of course, from the $4.6 trillion in budget cuts, almost entirely from spending reductions, Rep. Paul Ryan has proposed and which the House of Representatives passed.
Still, it’s striking that in almost every category—from Social Security to defense to education and transportation—the president’s budget would spend more over the next decade than either Murray’s or Ryan’s would.
Why? Because the president is intent on preserving his initiatives to “invest” in America, otherwise known as his pet projects. They include boosting scientific research, expanding pre-K education, repairing infrastructure, and protecting Pell grants and other college aid for families of modest income. He’d pay for them by reducing tax deductions for wealthier Americans.
Some of these initiatives are worthy, but I thought the additional revenue was supposed to pay for reductions in entitlements, including bending Medicare’s cost curve in the coming years. That’s where the big budget crunch will come a decade from now, as even Paul Krugman grudgingly acknowledges.
President Obama’s budget will be thrown into the mix of the two conflicting Congressional budgets that already have passed, and Murray and Ryan, who don’t agree on much of anything, say the reconciliation process is moving forward. (All three budget proposals would substitute their cuts and revenue increases for the hated $1.2-trillion sequester, the beast that refuses to die.)
I believe the president is positioning himself as the Reasonable Alternative, offering more entitlement reforms than Murray did but also tax increases, unlike Ryan. He’s hoping he can negotiate some compromise, even a bad one, like the January 1st fiscal cliff deal.
But Republicans will probably demand even more entitlement reform before they’ll even consider additional revenue. And more entitlement reform may cause an open revolt among liberal Democrats. It’s a very delicate balance, requiring more diplomacy than this president has displayed so far, and it shows how politically charged these issues are.
Still, I’ll cite what former Controller General David Walker, a fiscal hawk and CEO of the Comeback America Initiative, said:
The President has shown some leadership by presenting a budget that opens the door to more compromise. Now he needs to step forward and finish building a bridge to a Grand Bargain–before the clock runs out on us.
It’s a small step on a long, difficult journey, and the path ahead is full of peril.