Obama wants to invest in the economy. So why does he celebrate spending cuts?


President Obama looks through a microscope during a tour of an oncology laboratory at the National Institutes of Health. (Lawrence Jackson/White House)

Nothing  better illustrates President Obama's theory of government investment than the National Institutes of Health. Taxpayers fund the NIH, which in turn backs many research projects that would be too expensive or too broad for private companies to invest in. The public benefits with life-saving cures, businesses benefit from groundbreaking research they can build upon, and the nation's economy and health are better off.

The question, then, is why Obama proposed only $30.2 billion for the NIH in his 2015 budget, which was released Tuesday. It's not that he doesn't recognize the value of biomedical research. In his budget, he describes the need for "investments in cutting edge research and development, driving scientific and technological breakthroughs that will create jobs, improve lives, and open new opportunities for the American people." He makes a priority of funding NIH, which faces sharp cuts in the years ahead without additional congressional action.

But Obama's ambition is not very great. As this chart from the Federation of American Societies for Experimental Biology shows, inflation-adjusted NIH funding has lagged for years — except for a temporary boost thanks to Obama's stimulus at the beginning of his term.


At a time when other countries are racing to invest in research and development, Obama would keep NIH stumbling along. "The NIH budget in the president's submitted budget is disappointing," Sen. Ben Cardin (D-Md.) told me. "We're in global competition and we need to show a commitment toward basic research. And the failure to put more money in the budget is the wrong signal."

Obama's approach to NIH is indicative of one of the most perplexing features of Obama's economic policy — one that was on display once again Tuesday. The president talks over and over about the need to invest in important areas of the economy — education to prepare the next generation, infrastructure to generate jobs and boost competitiveness, and research and development so that America remains the world's leading innovator. He's explained he's willing to trim entitlements, known as mandatory spending, and raise taxes precisely because he wants to preserve money for these types of investments — what budget wonks call "non-defense discretionary spending."

And then, he writes in his budget plan, "under the Budget proposals, discretionary spending will fall to its lowest level as a share of the economy in more than 50 years." It's not the first time the White House has pointed this peculiar fact out. Over and over, Obama and his top aides have noted that they have succeeded in reducing discretionary spending, which also includes defense expenditures. This chart shows non-defense discretionary spending as a percentage of gross domestic product, with the red line reflecting estimates in Tuesday's budget release.


(Based on data from the Office of Management and Budget)

One reasonable argument is the White House needs to point out that it has brought discretionary spending to this low level as a defense against Republicans, who allege that Obama's a profligate spender. The White House can make the case that we've already gone so low that we can't go lower. In the context of the NIH, it's a marvel they're able to keep the budget what it is given the intense pressure to trim spending. But often the administration's message comes across not as a warning about further cuts, but as boasting about the cuts that have been achieved. Obama campaign surrogates have trumpeted the fact. On the White House Web site, a page is even dedicated to celebrating how Obama's policies reduce "discretionary spending to its lowest level as a share of the economy since Dwight D. Eisenhower was President."


On Tuesday, I asked White House economic advisers at a budget news conference whether the low rate of discretionary spending represents an achievement or a failure. Sylvia Mathews Burwell, Obama's budget director, said she thought it was a success. "I think what we think is that the proposed president’s budget is the right level over the 10-year period and that we believe that those levels are the correct level," she said. 

What's hard to know is whether Obama and his top advisers really believe this. Given their statements on the importance of public investment, it's hard to think they truly believe reducing discretionary spending to such lows is a good thing. But the politics may be that Obama has no room to maneuver. On his left, liberal Democrats have no appetite for dramatic cuts to entitlements like Social Security and Medicare that might allow for significant boosts in discretionary spending. On his right, Republicans totally reject the idea of raising taxes to fund discretionary spending. And even though investors are willing to lend the Treasury money at extremely low rates, nobody seems to have an interest in borrowing to finance investments.

But listen closely to the words of some in the White House, and a little bit of what they're truly thinking may come through. Gene Sperling, the long-time economic adviser whose last day in the White House is Wednesday, made the case for domestic spending at the news conference Tuesday. He framed it in terms of the current choices facing the White House. But it was easy to apply more broadly.

"You may not have the greatest constituency for the people who will be cured by cancer, by unknown NIH investments, or the families that will be better because they’ve got early childhood education," he said. But, he added, "We have to have a very important discussion about what is the composition of our budget in terms of how much we continue to invest in the future." 

Zachary A. Goldfarb is policy editor at The Washington Post.
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