Although it was two months overdue, the president’s FY2014 budget proposal still didn’t fail to make a splash in Washington, DC. Despite the oft-repeated adage, “The President proposes, Congress disposes,” the budget proposal sheds considerable light on the administration’s priorities, and gives advocates the fuel to argue a program’s merits, or in some circumstances, a reason to rally together.
Overall, the President’s proposal is consistent with the previously-set Budget Control Act spending caps, including $2 in spending cuts to $1 in revenue increases to cancel the sequester. The spending cuts include $400 billion from health entitlement programs like Medicare and $200 billion from discretionary spending, half of which coming from defense. Large themes included business tax overhaul proposals, like the “Buffett Rule” and limiting tax deductions to 28% for top earners. The budget also would increase the cigarette tax to $1.95 per pack to pay for a program that would expand access to pre-K education for all 4-year-olds.
The budget presented challenges for groups on both sides of the political aisle. For those on the left, tying Social Security cost-of-living adjustments to chained CPI (resulting in lower increases) presents serious political problems; for those on the right, any increase in revenue is anathema.
The FY2014 cycle has already started out a little whacky as both the House and Senate have already passed their budget resolutions, blueprints that will guide each chamber as they work through the appropriations process this year. The House Republican budget, commonly referred to as the Ryan Budget after House Budget Committee Paul Ryan (R-WI), assumes no new revenue and relies solely on spending cuts – with huge entitlement reforms and significant cuts to nondefense discretionary spending. The Senate’s budget, the Murray budget, named for – you guessed it – Senate Budget Committee Chairman Patty Murray (D-WA) assumes almost $1 trillion in new revenues over 10 years, but does also include some spending cuts like $240 million to defense spending. Mr. Obama’s plan seems to fall somewhere in the middle of these two Congressional proposals.
What may be more useful to those following the budget process is to use the president’s proposal as a measure for considering the implications of all the proposals on the table for potential deficit reduction talks later this summer, as we approach debt limit negotiations. It’s not an election year, so perhaps Congress and the President will find the opportunity is ripe for compromise. We now have three plans on the table – and middle ground to be found. . .again.
Over the next few weeks we will be featuring specific policy areas and their budgetary implications for FY2014 and beyond. Be sure to check back here for more!