Washington Matters


Ignore Obama's Budget

David Morris

Presidents' budgets have little resemblance to the final product. That’s truer than ever this year.



Don’t waste your time studying President Obama’s budget.

It’s not worth the paper it’s printed on.

That is not intended as a slam, just an expression of the political reality in Washington these days. In the best of times, presidential budget blueprints have little in common with the final product worked out by the House and Senate. This year, with the partisan chasm between the Republican House and Democratic Senate resembling the Grand Canyon, the president’s spending plan is especially trivial.

It’s probably not a stretch to say the only similarities between Obama’s budget, the spending plans that will come from both parties in Congress, and the version everyone eventually agrees on are the dollar signs. The actual numbers will be different. The priorities will be different, too.

Obama’s budget weighs in at $3.7 trillion. Too much, Republicans say. They’re pushing for bigger and faster cuts to get a better start on reducing the federal deficit.

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To be sure, Obama proposes some cuts, including scaling back programs that are important to many Democrats, such as community block grants and home energy assistance payments to those with low incomes.

But he also uses new revenue-generating sources, otherwise known as tax increases, to bring in an extra $1.6 billion in coming years. Some of the money would come from allowing tax cuts for households with incomes above $250,000 to expire in 2013 and limiting their itemized deductions this year. He’s fought these fights before, so far unsuccessfully.

Other revenue would come from eliminating subsidies for gas and oil companies, requiring financial institutions to pay new fees to cover the taxpayers’ cost of the Troubled Asset Relief Program and slapping a new tax on hedge funds. The GOP will push back hard against these provisions.

Indeed, anything in the budget that includes the word “tax” and is not immediately followed by the word “cut” has zero chance of winning Republican votes.

Instead, Republicans want to cut even deeper, and they’re floating plans to do just that in bills that would provide a framework for the fiscal year starting Oct. 1 and in legislation that would extend funding for government programs for the rest of this fiscal year. The continuing resolution that allows the government to operate at last year’s funding levels expires March 4. Both parties say they want to avoid a government shutdown, but neither side seems to know what to expect after the House GOP pushes to slice as much as $100 billion from government agencies for the next seven months and Senate Democrats block them.

No matter which party wins these fights, the overall deficit will be largely unaffected. That’s because most federal dollars are earmarked for entitlement programs such as Social Security, Medicare and Medicaid, and for other nondiscretionary spending. Those programs aren’t part of this budget battle, and their costs continue to mount.

You will hear a lot of Republicans and commentators grousing that Obama is ignoring the deficit by failing to address entitlement spending in his budget, but that’s mostly wishful thinking on the GOP’s part. Without a deal in place, it would be tantamount to political suicide for Obama to specify cuts and changes he would make in Social Security and Medicare, especially. Republicans would be able to run away from the plan and paint Obama as the villain who tried to cut Social Security checks for seniors. That’s not a visual Obama’s team wants to confront during his 2012 reelection bid.

Any solution to entitlement spending will require Obama and key lawmakers from both parties to work together. There are tough choices to be made, and the only way to make them is by sharing the risk.

But that’s a fight for another day. Before figuring out how to bring the future costs of Social Security and Medicare under control, lawmakers must first determine if they can agree on short-term funding to keep the government running on March 5 and to again keep the lights on in Washington when the new fiscal year starts Oct. 1.

Obama will be a central player in all of this.

But by then, his budget plan will have become little more than a footnote.



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