This article first appeared in the St. Louis Beacon, April 12, 2013 - WASHINGTON – Even though President Barack Obama’s new budget tosses some bones to deficit hawks in an effort to loosen the debt deadlock, congressional Republicans gave few indications that they would be willing to compromise on his demand for revenue hikes.
While some Democrats praised the budget, many liberals, including U.S. Rep. William Lacy Clay, D-St. Louis, said they would fight one of the main budget concessions: the White House's proposal to use a less generous measure of inflation (“chained CPI”) to calculate cost-of-living increases for beneficiaries of many federal programs, including most Social Security recipients.
“Chained CPI" is the wrong policy at the wrong time for a population that is already feeling a major financial squeeze,” Clay said in a statement to the Beacon. “It should not be a part of President Obama's budget plan or offered as a concession for an unlikely grand bargain with Republicans.”
While U.S Sen. Roy Blunt, R-Mo., said chained CPI should be considered as one potential way of reducing government spending, he joined many other congressional Republicans – including U.S. Rep. Ann Wagner, R-Ballwin -- in panning Obama’s budget for the fiscal year that starts Oct. 1.
“I’m pleased that President Obama seems to understand that something must be done to address entitlement reform,” Blunt said. “But if he is serious about not kicking this problem down the road, he should not hold modest entitlement reform hostage for a $1.1 trillion tax hike.”
But Obama’s allies on Capitol Hill, including U.S. Sen. Dick Durbin, D-Ill., praised parts of the White House budget that call for greater investments in manufacturing, small business, infrastructure, energy, research and education.
“The president’s budget shows that we can cut the debt while still making important investments in the things that create jobs and grow the economy,” Durbin said in a statement.
“Investing in manufacturing, infrastructure, clean energy, scientific research and education will strengthen the middle class and continue our drive out of the worst recession in a generation. These new investments, coupled with a balanced attempt to cut our debt, will put us on stable economic footing.”
Obama budget differs from House, Senate
While the White House budget was sent to Congress two months later than the normal cycle, it does include far more detailed plans for spending on each federal agency. The House and Senate, which already have given initial approval to overall budget numbers, will fill in the department-by-department plans through the appropriations process.
Obama’s budget aims to trim the national deficit over three years through a combination of spending reductions and revenue increases. He has proposed a “Buffet rule” tax hike – under which millionaires would have to pay at least 30 percent of their income in taxes – as well as a 28 percent cap on tax deductions for high earners. Also, couples with incomes starting at about $170,000 a year would have to pay about 5 percent more for Medicare premiums.
The White House plan would cut federal spending by an estimated $1.2 trillion over a decade. The proposed reductions include $306 billion that would, in theory, be gained from Medicare providers by relying more on generic drugs and demanding greater efficiencies from hospitals.
In addition, drug firms would pay a larger share of the costs now paid by low-income recipients of Medicare. Overall farm subsidies would be cut by $38 billion, and there would be reductions in spending at the Pentagon and other departments.
However, Obama also wants to bolster spending in some key sectors, including investments in education, manufacturing, clean energy and infrastructure. He told reporters that “building new roads and bridges, educating our children from the youngest age, helping more families afford college, making sure that hard work pays . . . are things that should not be partisan.”
As long as some taxes are increased, Obama said, investments can still be made in the economy. “For years, the debate in this town has raged between reducing our deficits at all costs, and making the investments necessary to grow our economy,” the president said. “And this budget answers that argument because we can do both. We can grow our economy and shrink our deficits.”
Republicans take aim, reject tax proposals
The White House budget – which is merely a blueprint and unlikely even to come to a vote – contrasts sharply with the House-passed bill developed by Budget Committee Chairman U.S. Rep. Paul Ryan, R-Wisc., the 2012 Republican vice presidential nominee.
Ryan's plan, already approved by the House, seeks to balance the budget in a decade by means of deep cuts to health care and social programs – while lowering some tax rates.
Blunt called the White House plan “more of the same bloated spending and higher taxes that we’ve come to expect from the Obama administration – which has left the nation with stagnant job growth and skyrocketing debt.
“We need to grow the economy – not the size of government,” Blunt contended. “But instead of proposing policies that would help rein in spending and put more Americans back to work, President Obama’s budget includes almost $1 trillion in new spending, $8.2 trillion in new debt, and $1.1 trillion in new taxes.”
Reflecting the House GOP position, Wagner – who supported the Ryan budget – criticized Obama’s plan because it “calls for more taxes and more government and never balances.” She said tax increases should not even be considered.
Referring to her St. Louis County district, Wagner said in a statement: “For the people of the 2nd District, a balanced budget means more jobs, it means a better standard of living, and it means a more secure retirement for all Americans.”
While Wagner said she was “encouraged” by Obama’s apparent willingness to take “small steps to reform Social Security and Medicare,” Clay took the opposite position – singling out the chained CPI proposal for criticism in a budget blueprint that he felt otherwise had positive aspects.
“Chained CPI punishes the most vulnerable seniors, especially among minority communities, by shrinking benefits in the years an older person has more out-of-pocket medical expenses,” said Clay. “That is especially critical for many African-American and Latino seniors who depend on Social Security as their only source of retirement income.”
Reflecting some of his St. Louis colleague’s concerns, U.S. Rep. Bill Enyart, D-Belleville, said he was “dismayed by the administration's proposal to cut Social Security and make it tougher for seniors in their retirement.” He also said he was concerned about possible Pentagon cutbacks that could end up “undermining Scott Air Force Base.”
U.S. Sen. Claire McCaskill, D-Mo., did not comment Thursday about Obama’s budget plan but told reporters last month that she had discussed some ideas with the president by phone. Without specifically endorsing chained CPI, the senator said she supported talks aimed at reining in entitlement costs in a way that would not harm seniors.
While Republicans have criticized Obama for focusing too much on raising new revenue and too little on reforming entitlement programs, McCaskill said the president -- “much to the consternation of some of the people that are on the far extremes of the Democratic Party -- has put things on the table that the Republicans are not acknowledging.”
Those possibilities included “more aggressive means testing in the Medicare program,” McCaskill said, as well as a chained CPI that would slow the increase in Social Security payments related to inflation. That issue is “a real hot button with many of the people in his party. So he already has stuck his chin out there, and laid out” some possible changes.
Another Missouri Republican who criticized the White House budget was U.S. Rep. Blaine Luetkemeyer, R-St. Elizabeth.
“The American people are tired of this same old song and dance from the president and his allies when it comes to spending their hard-earned tax dollars,” said Luetkemeyer. “So it would be safe to say that the president’s budget proposal as submitted is dead on arrival in the House.”
One small part of the budget that Blunt promised to fight would give food-aid programs abroad more flexibility in the source of that food.
While current law requires all U.S. food aid originate in this country, the administration – while mandating that 55 percent of foreign food aid be bought in the U.S. – would like to cut costs by getting more flexibility to buy locally in the regions with refugees or areas hit by famine.
“President Obama’s budget also eliminates funding for the Food for Peace program, which is vital to linking American agriculture with developing countries around the world,” Blunt said in a statement.
“I’ve written the president with a bipartisan group of 20 of my colleagues to urge him to maintain funding for this vital program. I’m very disappointed the president did not heed our request when developing his budget.”