WASHINGTON — Taking a pass on reining in government growth, President Obama unveiled a record $3.8 trillion election-year budget plan Monday, calling for stimulus-style spending on roads and schools and tax hikes on the wealthy to help pay the costs. The ideas landed with a thud on Capitol Hill.
Though the Pentagon and a number of Cabinet agencies would get squeezed, Obama would leave the spiraling growth of health care programs for the elderly and the poor largely unchecked. The plan claims $4 trillion in deficit savings over the coming decade, but most of it would be through tax increases that Republicans oppose, lower war costs already in motion and budget cuts enacted last year in a debt pact with GOP lawmakers.
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Many of the ideas in the White House plan for the 2013 budget year will be thrashed out during this year’s election campaigns as the Republicans try to oust Obama from the White House and add Senate control to their command of the House.
“We can’t just cut our way into growth,” Obama said at a campaign-style rally at a community college in the vote-rich Northern Virginia suburbs. “We can cut back on the things that we don’t need, but we also have to make sure that everyone is paying their fair share for the things that we do need.”
Maine Rep. Chellie Pingree, D-1st District, praised Obama’s $8 billion initiative to use community colleges to train workers for better-paying jobs in high-growth industries, and said she favored Obama’s proposal to increase taxes on wealthier Americans.
“The president is right to push for the ‘Buffett Rule’ and a rollback of the Bush tax cuts on the rich,” Pingree said in a written statement. “Millionaires shouldn’t be paying lower tax rates than working families.”
But Republican Sen. Susan Collins of Maine said in a written statement that Obama’s proposed budget “would continue to borrow and spend far too much. After four years in a row with deficits in excess of $1 trillion, this proposal is simply unacceptable and doesn’t do enough to realistically rein in spending and reduce our deficit.”
GOP Sen. Olympia Snowe of Maine issued a similar criticism, saying in a written statement that “at the end of the day, the president’s budget does little to reduce the size and scope of the federal government, decrease our nation’s debt and deficit, or put our nation on the road to economic growth and job creation that will help the nearly 13 million Americans presently unemployed find work.”
Democratic Rep. Mike Michaud of Maine’s 2nd District said he supports Obama’s proposal to end the Bush-era tax cuts for families earning more than $250,000 a year and eliminate tax subsidies for major oil companies. He also noted that the budget seeks an increase in spending on veterans.
“I don’t support everything in the president’s budget, but it is an important step in the annual appropriations process,” Michaud said in a written statement. “I hope this year Congress can put aside the bickering and partisanship and have substantive discussions about the difficult choices we face as we try to get our country on a more sustainable fiscal path.”
Republicans were unimpressed. “It seems like the president has decided again to campaign instead of govern and that he’s just going to duck this country’s fiscal problems,” said House Budget Committee Chairman Paul Ryan, R-Wis.
By the administration’s reckoning, the deficit would drop to $901 billion next year – still requiring the government to borrow 24 cents of every dollar it spends — and would settle in the $600 billion-plus range by 2015. The deficit for the current budget year, which ends Sept. 30, would hit $1.3 trillion, a near record and the fourth straight year of trillion-plus deficits.
Obama’s budget blueprint reprises a long roster of prior proposals: raising taxes on couples making more than $250,000 a year; eliminating tax breaks for oil and gas companies; and approving a series of smaller tax and fee proposals. Similar proposals failed even when the Democrats controlled Congress.
The Pentagon would cut purchases of Navy ships and F-35 Joint Strike Fighters – and trim 100,000 troops from its rolls over coming years – and NASA would scrap two missions to Mars.
But there are spending increases, too: The plan seeks $476 billion for transportation projects involving roads, bridges and a much-criticized high-speed rail initiative. Grants for better-performing schools would get a big increase under Obama’s “Race to the Top” initiative.
Republicans accused the president of yet again failing to do anything meaningful to reduce deficits that could threaten the country with a European-style debt crisis unless they are brought under control.
As a political document, the Obama plan blends a handful of jobs-boosting initiatives with poll-tested tax hikes on the rich, including higher taxes on dividends and income earned by hedge fund managers. That would allow Obama to draw a contrast with GOP front-runner Mitt Romney, whose personal fortune and relatively low tax rate would be an issue in the general election campaign.
Another contrast with Republicans will come on Medicare, the enormously popular health care programs for the elderly. Obama leaves the program mostly alone, while Republicans are on record in favor of gradually replacing the current system with a voucher-like plan.
Nor does Obama tackle Social Security’s fiscal imbalance. Payroll taxes paid into the program fall well short of what’s needed to cover benefits; the shortfall is made up by tapping into a $2.7 trillion trust fund that has built up since the last overhaul of the program in the early 1980s.
Said Romney: “We can save Social Security and Medicare with a few common-sense reforms, and – unlike President Obama – I’m not afraid to put them on the table.”
– MaineToday Media Washington Bureau Chief Jonathan Riskind contributed to this report.
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