BREAKING: White House budget to boost spending by $56 billion, drop Boehner ‘grand bargain’


(Photo by Karen Bleier/AFP/Getty Images)

The White House budget to be released early next month will propose $56 billion in new spending on domestic and defense priorities and drop a proposal that was included in last year's budget as a way to attract Republican support -- a plan that would have included less generous payouts of Social Security benefits.

The budget would aim to reduce the emphasis on austerity that has been the preoccupation of American politics for the past four years and also highlights top Democratic priorities in a year when Democrats hope to save their majority in the Senate.

A White House official said President Obama decided to release a budget that fully represents his "vision," rather than to continue to pursue a fiscal agreement, because Republicans have refused to engage in good-faith negotiations over the nation's top priorities. Obama is planning to pay for fresh spending by closing tax breaks that disproportionately benefit the wealthy.

"Last year, the administration took a detour from that path by embedding in the fiscal year 2014 budget a potential compromise that the president had offered to the Republican leadership just a few months prior to the budget release," the White House official said Thursday. But, "Republicans consistently showed a lack of willingness to negotiate on a deficit reduction deal, refusing to identify even one unfair tax loophole they would be willing to close, despite the president's willingness to put tough things on the table."

While that offer remains on the table, the official said, it will not be incorporated into the budget. This proposal comes after a relatively peaceful time in the capital's ongoing budget wars. Congress agreed to a two-year budget plan last year and bypassed another fight over the debt limit earlier this month.

For several years, Obama has pursued a "grand bargain" on budgets, first with House Speaker John Boehner (R-Ohio) and then with Senate Republicans. But those efforts have always fizzled. As part of the talks, the president has offered a proposal known as "chained CPI," which uses a less generous formula for increasing Social Security benefits. Many liberals groups have slammed that idea.

On Thursday, liberals cheered Obama's decision to drop the Social Security offer, while Republicans said they always suspected Obama wasn't serious about it.

“I applaud President Obama for his important decision to protect Social Security,” said Sen. Bernie Sanders, the liberal independent from Vermont. “With the middle class struggling and more people living in poverty than ever before, we cannot afford to make life even more difficult for seniors and some of the most vulnerable people in America.  I look forward to working with the president to support the needs of the elderly, the children, the sick and the poor.”

But Brendan Buck, a Boehner spokesman, said, "This reaffirms what has become all too apparent: the president has no interest in doing anything, even modest, to address our looming debt crisis."

The new budget is due March 4. It builds on spending levels for 2015 set by a bipartisan budget deal reached by House Budget Committee Chairman Paul Ryan (R-Wis.) and Senate Budget Committee Chairwoman Patty Murray (D-Wash.) by proposing $56 billion in new spending on domestic and non-defense initiatives.

While the official did not describe in detail how the new spending would be paid for, it will certainly include proposals to eliminate tax breaks that benefit the wealthy, as well as changes to mandatory programs, such as Medicare.

Obama will bundle the new $56 billion in spending into an "Opportunity, Growth, and Security Initiative," eliminating the remaining non-defense sequestration cuts in place for 2015. 

The initiative will include: creating 45 new manufacturing institutes, a "Race to the Top" program for states that promote energy efficiency; job training programs aimed at expanding apprenticeships and pairing colleges and private employers; and universal pre-K and expanded Head Start.

The budget also appears to assume that the slowdown in health-care costs will continue and that immigration reform will be passed. As a result, the White House expects to project that the deficit will be below 2 percent of the size of the economy in 10 years.

Related:

Obama’s budget shows how difficult it will be for him to achieve his 2nd-term goals

 

Zachary A. Goldfarb is a staff writer covering the White House, focusing on President Obama’s economic, financial and fiscal policy.
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