For Obama, budget comes drama-free
WASHINGTON — Six years into his presidency, President Barack Obama is sending Congress a budget that for once does not herald a partisan legislative showdown.
There’s no push to overhaul health care as he did in 2009, no drive as in 2010 to restrict Wall Street, no attempt to increase taxes as in 2011 and 2012, no move to halt automatic spending cuts as in 2013.
Politically speaking, this is a peacetime budget in an election year, when the most meaningful fights will take place during congressional campaigns, not on the floors of Congress.
As such, Obama’s budget, to be released Tuesday, will offer a template for Democratic political messaging.
To the delight of Democrats, this will not be an austerity budget like last year’s.
Instead, Obama’s spending blueprint for the budget year that begins Oct. 1 proposes $56 billion in spending above the caps agreed to in a bipartisan deal from earlier this year. Under the plan, the extra spending would not add to the deficit because Obama proposes to pay for it with a mix of program cuts and eliminating tax breaks.
Tax, defense plans
It proposes to bring in more revenue through stricter tax rules for U.S. companies that have operations overseas and for foreign businesses with divisions in the United States. Those new rules, requiring congressional action, would tackle what the Obama administration considers tax avoidance schemes.
The $56 billion wish list in Obama’s budget is split evenly between domestic programs and defense. It includes an expansion of an earned income tax credit that currently primarily helps low-income working families with children. Obama’s plan, which some conservatives embrace, would provide more tax credits to childless workers as well.
The plan would renew Obama’s call for universal preschool, which he has proposed paying for with a cigarette tax. It would expand job training programs, create manufacturing institutes and help states reduce energy consumption.
Obama’s proposal to increase spending on defense would be contingent on increasing domestic spending as well, in a move designed to put pressure on defenseminded Republicans.
Defense Secretary Chuck Hagel said the extra dollars, which would restore some money trimmed through automatic spending cuts known as the sequester, would permit the Pentagon to increase training, improve aircraft and weapons systems and repair military facilities.
“Continued sequestration cuts would compromise our national security both for the short- and long-term,” Hagel said.
Obama will recommend tax changes that would generate billions in revenues to help pay for those initiatives.
Aimed at big business
His tax proposals include efforts to curtail what the administration views as tax avoidance schemes by U.S. companies with business overseas or by foreign-owned companies with operations in the United States.
One proposal would seek to limit the ability of companies to take advantage of differences in tax rules from country to country, administration officials said. A second would restrict the ability of multinational corporations to assign much of their debt to U.S. operations in order to take advantage of U.S. interest deductions. A third would classify as taxable the income from certain digital transactions that have been able to escape U.S. taxation.
The proposals are part of an international effort by leading economies to limit tax avoidance by multinational companies. Administration officials said the proposals in the budget would raise several billion a year and could be part of a broader tax overhaul that would be used to reduce corporate tax rates.
But Congress probably will not tackle such a massive task this year. After the leading Republican tax writer in the House came out with a detailed plan to change the tax system, House Speaker John Boehner, R-Ohio, made no commitments to take it up.
He said the proposal by the chairman of the House Ways and Means Committee, Rep. Dave Camp, R-Mich., had allowed a “conversation” to begin on overhauling tax laws.