WASHINGTON - President Barack Obama on Tuesday sent his final annual budget proposal to a hostile Republican-led Congress, seeking $19 billion (Dh69.73 billion) for a broad new cybersecurity initiative and rejecting the lame-duck label as he declared that his plan “is about looking forward.”
The budget for fiscal year 2017, which starts October 1, would top $4 trillion, although only about one-quarter of that is the so-called discretionary spending for domestic and military programs that the president and Congress dicker over each year. The rest is for mandatory spending, chiefly interest on the federal debt and the Social Security, Medicare and Medicaid benefits that are expanding as the population ages.
The deficit would increase in this fiscal year to $616 billion from $503 billion last year, the budget projects, in part because of myriad tax cuts that Obama and Congress agreed in December to make permanent. That would make this year’s shortfall equal to 3.3 per cent of the economy’s output, or gross domestic product, up from 2.5 per cent. That exceeds the 3 per cent threshold that economists consider sustainable for a growing economy.
In fiscal 2017 - which is covered by Obama’s spending and tax proposals, including a $10-a-barrel fee on oil - the deficit would dip again for a couple years but then begin increasing again, mainly because of the costs for aging Americans’ retirement and health care. But the administration says annual deficits would remain below 3 per cent of the GDP through the decade to 2026.
While Obama has achieved little to restrain the growth of the entitlement programs that many consider unsustainable, deficits would not return to levels exceeding $1 trillion, and nearly 10 per cent of GDP, like the shortfall he inherited in 2009 in the depth of recession, his budget projects.
So the president took something of a victory lap in the message accompanying his budget, striking an optimistic tone that contrasted sharply with the doomsday talk from Republican presidential candidates and congressional Republicans. “Together, we have brought America back,” Obama said.
“We rescued our economy from the depths of the recession, revitalized our auto industry, and laid down new rules to safeguard our economy from recklessness on Wall Street,” he said. “We made the largest investment in clean energy in our history, and made health care reform a reality. And today, our economy is the strongest, most durable on earth.”
Republicans disagreed.
“This budget joins his others by placing America on a fiscal path that is unsustainable and threatens our long-term economic growth,” said Senator Michael B. Enzi of Wyoming, chairman of the Senate Budget Committee.
Enzi and the chairman of the House Budget Committee, Representative Tom Price of Georgia, jointly announced days ago that they would not invite Obama’s budget director, Shaun Donovan, to testify before their panels — a break with a tradition dating to the start of the modern budget process in 1975 and a snub that captured the hostility facing Obama’s remaining agenda.
On Tuesday, Senate Democrats followed House Democrats in protesting what they called the “overt partisanship” of the action. Democrats on the Senate Budget Committee, led by Senator Bernie Sanders of Vermont, a presidential candidate, recalled that even in February 2004, when a ricin scare shuttered Senate offices, the budget committee borrowed House space to hear from president George W. Bush’s budget director.
Of the $1.2 billion in discretionary spending, about half would go to domestic programmes and half to the military.
Obama calls for more than $300 billion over a decade for infrastructure improvements and innovations for green-energy vehicles. That would be paid for with the oil fee, which Republican leaders have already rebuffed.
The White House pointed to the cybersecurity initiative as a centerpiece proposal that should garner bipartisan support. Obama made cybersecurity a theme of his 2008 campaign and held events in the White House his first few months in office to announce new cybersecurity steps.
His $19 billion cybersecurity request reflects a 35 per cent increase — $5 billion — above current spending. But part of that, a $3.1 billion proposal to overhaul the federal government’s aging computer systems, was prompted by a huge embarrassment, the successful Chinese theft of security records on 22 million Americans from the system run by the Office of Personnel Management. The attackers were in the system for more than a year, undetected. They shipped the data out of the federal systems almost daily, also without being noticed.
The president also has revived and added to a raft of proposals for closing or limiting tax breaks for the wealthy and some businesses, which would raise more than $1 trillion over 10 years to offset the costs for initiatives including worker retirement savings options, wage insurance, college assistance and early education.
Most of those tax increases are likely to go nowhere in Congress, yet a few of Obama’s revenue ideas in the past ultimately have been embraced in bipartisan budget deals to offset the costs of initiatives popular in both parties.
