Obama spending plan criticized for avoiding deficit commission’s major proposals
By Lori Montgomery,
President Obama drew fire Sunday from congressional Republicans and independent budget experts for his reluctance to advance a plan that would tackle the nation’s biggest budget problems in the spending blueprint he will submit to Congress on Monday.
In the first statement of his budget priorities since Republicans regained control of the House, Obama will avoid politically dangerous recommendations to wipe out cherished tax breaks and to restrain safety-net programs for the elderly, put forward last year by his own bipartisan fiscal commission as a strategy for reining in a soaring national debt.
White House budget director Jacob J. Lew has told advocates of reform that the White House thinks any significant plan offered by the president would simply become a target for partisan attack. Key Democrats, including Senate Budget Committee Chairman Kent Conrad (N.D.), said they accept that rationale. Republicans argued that Obama was abdicating a responsibility to chart a path to solvency.
“The country's biggest challenge, domestically speaking, no doubt about it, is a debt crisis. . . . It looks like the debt is going to continue rising under this budget,” House Budget Committee Chairman Paul Ryan (R-Wis.) said on “Fox News Sunday.” “Presidents are elected to lead, not to punt. And this president has been punting.”
Some who worked on Obama’s fiscal panel were also disappointed by his decision not to endorse any of the major elements of their deficit-reduction plan, which calls for raising the Social Security retirement age, charging wealthy seniors more for Medicare and limiting popular tax breaks such as the mortgage interest deduction. The plan has attracted support from key members of both parties and is the focus of an effort in the Senate to develop a bipartisan spending plan.
“I would have preferred to see the administration get out front on addressing the entitlements and the tax reform that we need to reduce long-run deficits,” said Alice Rivlin, a commission member who served as budget director in the Clinton White House. “But they clearly made a tactical decision that this is not the best way to get to a positive result.”
Erskine Bowles, the Democratic chairman of the fiscal commission, said the White House budget request goes “nowhere near where they will have to go to resolve our fiscal nightmare.”
Lew defended the White House on CNN’s “State of the Union” on Sunday, arguing that the fiscal commission had “a very significant impact” on the president’s budget blueprint. The spending plan incorporates “many, many ideas” developed by the commission, he said, including proposals to limit awards in medical malpractice lawsuits, overhaul the corporate tax system and freeze pay for federal workers.
“There’s more on the table, more that’s open for the kind of civil discourse that we need in order to make the tough decisions,” Lew said, echoing Obama’s call in his State of the Union address to work “on a bipartisan basis” to tackle entitlements and inefficiencies in the U.S. tax code.
Obama’s budget would trim deficits by $1.1 trillion over the next decade, Lew said, primarily through budget cuts at the Pentagon and a five-year freeze on domestic spending that targets many programs long favored by Democrats. For example, Obama’s budget would cut $100 billion from Pell Grants and other higher-education programs through 2021, scaling back a key Obama initiative.
An administration official, speaking on the condition of anonymity because the budget has not been released, said the bulk of the savings would come from ending Pell Grants for summer school students and reducing federal loan subsidies for graduate students, whose loans would begin accruing interest before their graduation date.
The official said the savings would be plowed back into Pell Grants, the primary federal college aid program for the poor. Demand for the grants shot up during the recession, and the program is facing a shortfall. The savings proposed by the White House would permit the government to maintain a maximum award of $5,550 for more than 9 million participating students.
“It’s important to note that we’re beyond the easy, low-hanging fruit,” Lew said. “We’re reducing programs that are important programs that we care about.”
Still, $1.1 trillion in savings would barely dent deficits that congressional budget analysts say could approach $12 trillion through 2021. The deficit is projected to approach $1.5 trillion this year and will remain above $1 trillion in 2012 under Obama’s new spending plan, Conrad said. In 2015, when Obama had hoped to get the deficit down to 3 percent of the economy, his new budget plan projects a deficit of 3.2 percent of gross domestic product, Conrad said.
Conrad, a key architect of the fiscal commission, said the president’s budget is a “first bid” in a complicated budget dance with resurgent Republicans that could include a charged debate over raising the legal limit on government borrowing, or even a government shutdown.
“I’m increasingly of the view that it’s going to take Congress, Republican and Democrats, starting in the Senate maybe, demonstrating that there is a way to reach an agreement and for the president to, in effect, serve as a referee,” Conrad said. “If we were to demonstrate we really could do something, I think it would bring the White House to the table — and, hopefully, the House.”
But House Republicans, who plan to vote this week on their plan to dramatically cut spending in the current fiscal year, said they will present their long-term strategy in the budget Ryan will craft in April.
“It’s all coming,” House Speaker John A. Boehner (R-Ohio) said on NBC’s “Meet the Press.” “You’ll see our budget, where I’ve got to believe we’re going to deal with the entitlement problem.”