The president’s 2016 budget is out and let’s face it: It’s horrible, and considering how the November elections went, bold. It would spend roughly $4 trillion in FY2016 — to be a little more precise, $3,999,000,000,000.
The president hopes to add another $2.1 trillion to the federal government’s annual budget by 2025, meaning we’ll be spending about $6.2 trillion a year. That’s a whole lot of money — thankfully, long-term budget projections rarely pan out, so let’s look at the short term.
The next year’s deficit is $583 billion, up $100 billion from FY2014. The plan is to cut it down to $474 billion the following year and to achieve a cumulative deficit reduction of $5.8 trillion over ten years. Right. With a budget that increases spending and raise taxes on productive people, this is remarkably hard to believe.
The previous justification for more spending was the weak economy. Yet the economy has fared relatively better since the (unintended) implementation of modest budget controls.
The president’s latest call for turning on the federal spigot is based on the premise that more federal spending is needed to boost the middle class – the same middle class that has struggled despite an orgy of debt-financed spending.
Now, in theory, his budget request doesn’t deserve much attention: The president is a lame duck and the Republicans control Congress. Thus the budget is more Democratic messaging for the next presidential election than it is a real set of policy proposals — so unsurprisingly, it’s cheap class-warfare politics.
But helping the president’s case here is the fact that the GOP seems to have a hard time making the case for middle-class prosperity without massive transfers of wealth from Uncle Sam. There are a number of places where Republicans could do a much better job of pushing back against the president. A few:
The budget fact sheet promises to “create the infrastructure that allows businesses to thrive and create good, high-paying jobs,” using more revenue from businesses — $478 billion in infrastructure spending over six years. I doubt this is going anywhere, but it’ll be interesting to see. Both Republicans and Democrats believe in the ability of government funded infrastructure spending to boost the economy; I’ve argued in the past that this isn’t always true, and that it’s almost certainly not going to provide the boost the president claims it will. Spending multipliers are likely to be low, and implementation is usually poor, as I explained here. (For more on the dubious benefits of infrastructure spending, see this piece in today’s Wall Street Journal.)
Second, the president would like to blow the sequester’s effective budget caps caps, splitting the spending evenly between defense and non-defense spending. The caps were tied to $2 billion in new borrowing, you may recall: The treasury got its borrowing authority, and Congress should chold up its end of the bargain. But further, considering our high levels of debt and the amount of debt we’re expected to pile on in the future, it’s not time to walk back basically the only fiscally responsible action of the last 6 years.
Unfortunately, I can see the president getting his way here, since the GOP wants more defense spending and it’s probably willing to tolerate more deficit-financed domestic spending in return.
The president’s budget is also loaded with soak-the-rich tax proposals, old and new. He’s bringing back his Buffet Tax — a minimum tax on the wealthy that raises taxes on investment — but hiding it under the name of the “Fair Share Tax.” He’s jacking up the capital-gains tax to its highest level since 1997 and even creating a second death tax. All in the name of fairness, naturally.
I can think of at least one way for congressional Republicans to blunt the president’s transparently populist appeal: Target corporate welfare. That means letting Ex-Im die and and reining in taxpayer handouts to well-to-do-farmers.
Those ideas, unlike tax increases, would have the merit of being good policy — but I’m not holding my breath.