Five things you missed in Obama’s budget
President Obama’s proposed tax hikes and infrastructure spending for 2013 have grabbed headlines. But there’s a slew of other changes that Obama has proposed in his $3.8 trillion budget that are worth flagging as well. Here are a few of them:
1) Obama wants to change the composition of nickels and pennies to save money. The president’s budget would give the Treasury Department the ability to “change the composition of coins to more cost-effective materials,” pointing out the current cost of making the penny is 2.4 cents and the nickel is 11.2 cents. Of course, the value of the U.S. dollar isn’t pegged to the materials that it’s composed of, but it’s still a compelling argument on its face. The composition of U.S. coins hasn’t changed since 1981, the Wall Street Journal notes, while major components like zinc have become more expensive. Industry lobbyists stalled the proposal when Obama brought it up in 2010, but it may have new appeal to the frugally-minded.
2) All employees without an existing retirement plan would be be automatically enrolled in an IRA. Obama initially proposed this on the 2008 campaign trail — and nearly included it in his 2010 budget — but this appears to be his most aggressive push yet to implement the idea. Under the proposal, all employers who don’t currently offer a retirement plan to their workers “will be required to enroll their employees in a direct-deposit IRA account.” These employees would be automatically enrolled in an IRA plan unless they chose to opt out. Small employers would be exempt from the mandate, but they would receive up to $250 per year if they set up a retirement plan and employees choose to sign up. The idea is the brainchild of behavioral economist Richard Thaler and Cass Sunstein, head of Obama’s Office of Information and Regulatory Affairs, but opponents have deemed it too paternalistic and a burden for employers.
3) Obama would strengthen enforcement against illegal immigrants while reducing the number in detention. The president’s budget would ramp up funding for two immigration verification programs: E-Verify, which helps employers determine whether potential employees are legally able to work in the United States, and Systematic Alien Verification for Entitlements (SAVE), which helps public agencies verify the immigration status of those applying for federal, state and local government benefits. There aren’t any new mandates for requiring employers or the government to screen for immigration status or go after illegal immigrants. But the new changes would make E-Verify a more reliable system by allowing applicants to voluntarily “self check” and pinpoint errors in their documentation, and both programs are intended “to promote compliance with immigration laws while preventing individuals from obtaining benefits they are not eligible to receive,” according to the budget.
That said, Obama’s budget also seems to respond to pro-immigration advocates who’ve criticized the administration for putting too many non-criminal illegal immigrants in detention, despite its vow to target criminal offenders. His budget increases alternatives to detention — including electronic minority and “intensive supervision” — for illegal immigrants caught by Immigration and Customs Enforcement who are deemed low-risk. And the overall funding level for ICE would be cut by $193 million, with the promise that “as ICE continues to focus on criminal and other priority cases, it expects to reduce the time removable aliens spend in detention custody.”
4) He doubles down on making Wall Street pay for TARP. Obama has been proposing a “financial crisis responsibility fee” on big banks since 2010, but he’s doubled the amount from a year ago: He’s now proposing that the “largest financial firms” pay a total of $61 billion as part of the payback for the government bailouts they’ve received, in contrast to $30 billion a year ago. That’s partly because the projected cost of TARP has increased from a few months earlier: The White House now projects that the bailout will cost $68 billion, and the proposed fee on big banks would help cover that bill, along with an additional $10 billion for mass refinancing.
But banks — many of whom have already paid back their TARP loans and were not directly responsible for making bad loans to home owners — won’t be happy with this proposal. There’s also a debate over whether the White House’s price tag for TARP is too high: though Obama has lowered the fee since 2010 — when he proposed a $120 billion levy — it’s still significantly higher than the Congressional Budget Office’s estimated bill for TARP at $34 billion.
5) Obama lauds the Consumer Financial Protection Bureau, even though it has nothing to do with the 2013 appropriations process. The president’s budget isn’t just a list of numbers and policy proposals, but also a document to promote Obama’s accomplishments to the public. The traditional budgeting process doesn’t touch the CFPB — which is funded independently by the Federal Reserve, to the consternation of many Republicans — but Obama goes out of his way to praise and defend the new bureau, which is mentioned by name on six occasions in the 2013 budget.
His statements go straight to the heart of the controversy surrounding Obama’s recent recess appointment. “To ensure that consumers are protected, the President appointed Richard Cordray to head the CFPB,” the budget asserts. “Without a Director, the CFPB could not fully supervise non-bank financial institutions...this meant that tens of millions of Americans were left unprotected from falling prey to many of the harmful practices that contributed to the worst financial crisis since the Great Depression.”