Obama Budget Bets Other Concerns Will Trump the Deficit

Jonathan Weisman|The New York Times

President Obama will lay out a budget blueprint on Monday that amounts to an election-year bet that a plan for higher taxes on the rich and more spending on popular programs like infrastructure and manufacturing will trump concerns over the deficit.

The new budget proposal contrasts with the deficit-cutting promises that attended the budget rollout last year and the debates that followed. Figures released on Friday indicate that the White House foresees a slightly higher deficit in the current fiscal year than the $1.3 trillion deficit of the 2011 fiscal year, even after the budget battles that dominated Washington last year.

The deficit is projected to fall to $901 billion in the fiscal year that starts in October, the first time since 2008 that the red ink would be below the $1 trillion mark. But last year, the White House had projected the 2013 deficit dropping further, to $768 billion.

Under White House projections, the deficit would reach $575 billion in 2018, or 2.7 percent of the economy, before rising again to $704 billion in 2022, or 2.8 percent.

The highlights of the plan for the 2013 fiscal year may not be those bottom-line figures but the spending inside.

A senior administration official on Friday evening framed the budget as the third act in a three-act play, which started with the fiery populism of Mr. Obama’s December speech in Osawatomie, Kan., continued with his State of the Union address and ends with a politically freighted budget rollout on Monday at a community college in the electoral battleground of Northern Virginia. Budget unveilings are usually handled in Washington by White House staff and cabinet members, with a brief message from the president.

The budget document distributed on Friday on Capitol Hill was permeated by the language of Mr. Obama’s State of the Unionaddress and his call “to construct an economy that is built to last.” But the words and the policies hark back to the first year of Mr. Obama’s presidency and his call for a “New Foundation.”

In essence, Mr. Obama will campaign on a vow to stay the course.

“We must transform our economy from one focused on speculating, spending and borrowing to one constructed on the solid foundation of educating, innovating, and building,” the document states.

As Democrats promote the revival of manufacturing, the president will call for an additional $2.2 billion for advanced manufacturing research and development, a 19 percent leap over the current year. In all, Mr. Obama will seek a 5 percent increase in nonmilitary research spending.

For more immediate job programs, the White House will urge $350 billion in short-term job spending, as well as a six-year transportation and infrastructure program that would cost $476 billion. He will ask for $60 billion to refurbish at least 35,000 schools and help state and local governments hire and retain teachers, firefighters and police officers.

Tens of billions of dollars have already been spent on such efforts through the stimulus program passed in 2009, and Republicans in Congress — intent on calling the first effort a failure — are not about to embark on a new round.

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But the latest budget document can be seen as more a platform for the president’s re-election campaign than a legislative proposal for budget debates that will begin next week. The budget will call for a 10-year, $61 billion “financial crisis responsibility fee” to hit the largest financial companies and a tax overhaul referred to as “everyone pays their fair share.”

Congressional leaders of both parties have vowed to pursue an overhaul of the tax code to make it simpler and fairer. But Mr. Obama’s version includes proposals that have been partisan flashpoints. His version pushes for the elimination of “unfair tax breaks for millionaires.” The current alternative minimum tax — which hits some middle-class families — would be scrapped in favor the president’s “Buffett rule,” named after the billionaire investor Warren E. Buffett and devised to ensure that households earning more than $1 million a year pay no less than 30 percent of their income in taxes.

The budget document calls for a simpler tax code with lower rates, but the president also wants a tax overhaul to cut the deficit by $1.5 trillion through 2022 and allow President George W. Bush’s tax cuts to expire for families earning more than $250,000 a year.

New spending and targeted tax increases seem far more gaudy than the $638 billion in spending cuts the White House is claiming over 10 years from health programs like Medicare and Medicaid, agriculture subsidies, federal worker retirement funds and other programs.


In all, the White House is boasting of more than $4 trillion in “balanced deficit reduction” in the package over 10 years, a figure that includes $1 trillion in spending cuts agreed to last year after a series of confrontations with Congressional Republicans.

But the document’s numbers will show Mr. Obama has failed to meet his pledge to cut the deficit in half by the end of his term, and for Republicans, that will be the bottom line.

“President Obama pledged to cut the deficit in half by the end of his term,” said Stephen Miller, spokesman for the Republicans on the Senate Budget Committee. “Their optimistic projection is that next year’s deficit will be almost a trillion dollars — after four straight trillion-dollar deficits. So the White House is bragging about a broken promise?”

But deficit reduction may be beside the point. Mr. Obama appears to be laying out a campaign document that pits jobs programs paid for with tax increases on the rich against the deep spending cuts that will be the heart of the Republican Party’s economic program, rebuilding versus austerity.

House Republican leaders have already promised to follow the president’s plan with a budget document of their own that is largely based on last year’s blueprint drafted by Representative Paul D. Ryan, Republican of Wisconsin and the chairman of the House Budget Committee.

The new Ryan plan may temper his proposal to replace guaranteed, government-paid Medicare with vouchers that would be used to purchase private health insurance plans. Instead, Mr. Ryan is likely to propose a new version that offers traditional Medicare as an alternative to vouchers, mirroring the Republican presidential candidate Mitt Romney’s plan as well as the one Mr. Ryan drafted with Senator Ron Wyden, Democrat of Oregon.

As Republicans drive toward deeper spending cuts without tax increases, the president’s budget plan appears to have been drafted to maximize the contrast between the two parties, and to raise the stakes of the November election.