02.13.12

Obama’s 2013 Budget: Perfectly Reasonable, Absolutely Terrible

With no chance of passing Congress, the White House’s new budget turns into a political document showing the widening distance between the parties. Daniel Stone reports.

Just how rational is President Obama’s new budget for fiscal year 2013? That depends on whom you ask. But almost everyone in town can agree that its chances of getting by Congress are close to zero.

Releasing the $3.8 trillion document Monday morning, Obama began the annual process of proposing a sweeping vision for the nation’s fiscal outlook. The White House called it a “blueprint for how we can rebuild an economy where hard work pays off and responsibility is rewarded.” In a written statement, Obama said it was an ambitious goal for “what we will need to thrive in the 21st century.”

Yet even before the document became public, Republicans called it a nonstarter and dead on arrival. The reason: tax increases on virtually every person making more than $250,000 a year, corporations included. (They are “people” now, right?) The Bush tax cuts expire in the plan, and the Buffet rule would tax millionaires a base rate of 30 percent. In full, the plan also runs a roughly $1 trillion deficit for the fourth year in a row.

On display is the widening chasm between both parties on their legislative policies. Obama has spoken for more than a year about paying off debt by tweaking high-bracket tax rates. Republicans, many beholden to an anti-tax-raising pledge, have never shown willingness to play ball. Add it up, and Obama’s budget becomes more of a campaign document to show a “contrast” between the parties, as White House aides often say, than an actual legislative proposal drafted with the intent to govern.

Still, the president has the upper hand on some of the components, even if the full 256-page document falls flat. With no congressional action, the Bush-era tax cuts will expire at the end of the year, raising income-tax rates across the board—an overwhelmingly unpopular poison pill for both parties. Obama also proposed a three-year spending freeze on all federal agencies except defense, which may help inoculate him to attacks of overspending—a charge that’s certain to come during the campaign.

Republicans called it a nonstarter and dead on arrival. The reason: tax increases on virtually every person making more than $250,000 a year, corporations included.

The government will remain funded, but likely under the same resolution that both chambers have passed for the past two years, which avoids a partisan fight or an eventual government shutdown. Senate Republicans lament that Democrats haven’t passed a budget in more than 1,000 days, but Democrats answer that the GOP hasn’t been willing to come to the table and negotiate in earnest.

With Congress not buying, Obama traveled Monday to a community college in Annandale, Va., to make a sales pitch to the American public. (Schools would receive a chunk of $100 billion in new investments in things like education, transportation infrastructure, and emergency-service providers). Faced with the reality of Republican unwillingness, the White House didn’t blink. The president has a responsibility to lay out his vision, says one aide, who, under the usual rules of anonymity, asked not to be named. If the GOP doesn’t want to play ball, “then let’s have that debate.”