Deficit reduction takes a back seat to job growth in the federal budget President Obama will unveil Monday. The spending plan forecasts more red ink in the current fiscal year than in 2011. Under the president’s plan, budget deficits wouldn’t reach a sustainable level until 2018.
The budget blueprint calls for hundreds of billions of dollars in new federal spending, aimed at spurring economic growth. Many of the proposals are recycled from the American Jobs Act that Obama put forward in September. Most of those plans have languished in a divided Congress, and the president’s budget is likely to do the same.
Rather than a realistic road map for government spending, the White House budget is likely to serve as a political tool in the president’s re-election bid. It provides more detail for the policies spelled out in the State of the Union address.
“We must transform our economy from one focused on speculating, spending, and borrowing to one constructed on the solid foundation of education, innovating, and building,” says a budget document prepared by the White House.
The plan calls for $140 billion in research and development spending, including $2.2 billion for advanced manufacturing. Obama also wants to invest $476 billion over six years in transportation infrastructure, financed in part with money that will no longer be needed in Iraq and Afghanistan.
The president’s budget renews his call for higher taxes on the wealthy. That includes an end to Bush-era tax cuts for families earning more than $250,000 a year, limited tax deductions for high earners and the so-called “Buffet Rule,” which would ensure that millionaires pay a minimum tax rate of 30 percent.
All told, the budget proposes $1.5 trillion in new tax revenue over the coming decade. That includes a new, $61 billion tax on big banks and $41 billion in additional taxes on fossil fuel producers.
Even before Monday’s formal release, Republicans criticized the spending plan for raising taxes without doing more to stem the deficit. Republican presidential candidates and members of Congress favor deeper spending cuts and lower taxes. That disagreement is likely to frame the debate between now and the November election.
“I think there is pretty broad agreement that the time for austerity is not today,” said White House chief of staff Jacob Lew on NBC’s Meet the Press. Lew served as White House budget director until recently.
Obama spent much of the last year trying unsuccessfully to reach a deficit-cutting “grand bargain” with Republicans. Since September, he’s focused more aggressively on promoting job growth and his approval ratings have improved slightly.
The president has also benefited from an improving job market, but that won’t be reflected in the new budget. The document’s economic section, which was locked in months ago, predicts average unemployment this year of 8.9 percent, a figure that White House economists say is already out of date. January’s jobless rate was 8.3 percent.