President Obama’s budget proposal

The President has released his budget proposal for Fiscal Year 2014.  The President’s proposal as well as multiple others are summarized in graphical form here.  (It’s a nice graphic.  The overall length of the bar indicates spending.  The projected deficit/surplus is indicated by the position of the bar.)

Robert Greenstein of the Center on Budget and Policy Priorities (CBPP) has a good summary of Obama’s proposal here.   An excerpt:

The budget contains a mix of spending cuts and revenue increases that would replace the sequestration cuts and achieve the important goal of stabilizing the debt over the next decade…  The budget is designed to protect the still-weak economy from the effects of premature deficit reduction — by both including short-term investments to address infrastructure needs and by phasing in some of the deficit reduction measures that would replace sequestration in order to allow the economy to continue its recovery…

That would be a welcome change from the current budget path.  The Congressional Budget Office estimates that if sequestration remains in effect, it will cost the economy 750,000 jobs by the end of this year.

As it stands, the package makes tough policy choices while largely adhering to the principle… that deficit reduction should not increase poverty or inequality.  Nevertheless, the budget’s substantial spending cuts, both in entitlements and discretionary programs, would have real-world consequences for millions of individuals and families….

Politically speaking, I had thought that the White House should not put these concessions in its budget, as distinguished from offering them in bipartisan negotiations if and when Republicans agreed to dedicate substantial savings from curbing tax credits, deductions, and other preferences (known as “tax expenditures”) to deficit reduction.

There’s the thing, Obama came to the table with what would be an acceptable compromise proposal.   The Republicans aren’t going to compromise with him.  Boehner and McConnell’s statements last year that they’d want Chained CPI as a condition for considering tax increases?  Just words.  Boehner and McConnell are disingenuous shits.  They weren’t ever going to consider tax increases.  Why on Earth does Obama lead with a compromise position that will be summarily rejected?  What does he think that’s going to accomplish?  I am at a loss to understand…

Back to commentary from paid professionals:

Brad Plumer with “Winners and losers in the White House budget“.  Plumer identifies the winners as:

  • Medicaid
  • Low-income taxpayers
  • Hospitals
  • Scientists
  • Highway pavers
  • Preschool
  • Food aid receipients

and the losers as:

  • Wealthy taxpayers and the finance industry
  • Upper-income Medicare recipients
  • Many Social Security recipients
  • Farms and agribusinesses
  • Smokers
  • Pharmaceutical makers
  • Oil, gas and coal companies
  • And a number of federal agencies: EPA, Defense Department, State Department, Homeland Security, the Army Corps of Engineers, the Small Business Administration, and NASA

Jim Tankersley would also add 12 million unemployed people to the losers list.

For all its faults, in giving it a look the last few days, Obama’s proposal doesn’t actually look so bad.  (In addition to Greenstein’s overview above, see also Jared Bernstein’s assessment.)  It looks okay – not great, not awful, something I’d probably sign on to as compromise.  (See also the Affordable Care Act, a.k.a., Obamacare, as an example of a not great/not awful proposal that I’d agree to as a compromise to move things forward.)  But why on Earth do you lead with a mediocre proposal which is dead on arrival?   If your proposal will be DOA no matter what it is then why not lead with a good one?

Here’s a conversation between Dylan Matthews and Ezra Klein of WonkBlog/WaPo on the President’s budget proposal.  On the one hand it’s an intelligent discussion.  On the other hand, it reminds me why I’m never entirely comfortable around pundits even when I more or less agree with them.  (They tend to get caught up in the beauty of ideas and can fail to appreciate that real people may feel some real negative effects of the policies they’re considering.)

Dylan Matthews looks at the effect of implementing the Chained CPI on retirees. Ten years into retirement you’re looking at benefits about 3.5% lower than they would be without it.  In dollar terms Matthews has the reduction at about  $870/year.  (Again, I don’t see why we don’t eliminate the Social Security wage cap.  That would all but eliminate the need for benefits reductions.  Why is it fair to collect additional taxes on high wage earners?  Well, for one thing, those who live to age 65 have a significantly longer life expectancy than their low wage counterparts – ergo they collect benefits for a substantially longer period.)

Finally – Krugman predicted this and sure enough it happens – the GOP a Republican wastes no time in calling out Obama’s proposal to implement the Chained CPI as “a shocking attack on seniors“.   Can’t win for losing, Mr. President.