President Obama’s budget is short on specifics, fudging our current economic state and long on higher spending and higher taxes to pay for his political agenda, according to National Taxpayers Union Executive Vice President Pete Sepp.
Sepp says Republicans offered more fiscally responsible budget proposals than Obama in recent years but their blueprints were also far from what America needs to deal effectively with huge annual deficits and a massive national debt.
On Tuesday, the White House released the president’s budget blueprint for Fiscal Year 2015. It carries a price tag of nearly four trillion dollars, billions more in new spending and higher taxes on the wealthy to pay for it.
Much of Obama’s additional spending would be for infrastructure upgrades and ramping up for universal pre-kindergarten.
“Our budget is about choices, it’s about our values,” said Obama.
House Budget Committee Chairman Paul Ryan dismissed the plan as nothing more than a campaign brochure. So who is right?
“It is hard to call this a serious document if you are indeed serious about reducing the deficit through spending restraint. The message here is more spending and much higher revenues to pay for that spending, along with a lot of other rosy economic assumptions,” said Sepp, who listed several of what he considers flawed assumptions in the budget proposal.
“The assumptions for inflation, that it will be lower than what the Congressional Budget Office just projected, that entitlement payments will be lower than what the Congressional Budget Office projected and that Gross Domestic Product will be a whole lot higher. The differences here add up to a lot over the 10-year budget window,” said Sepp.
“It explains why the Congressional Budget Office just last month was projecting a budget deficit of over a trillion dollars ten years from now. The Obama administration is projecting one half that amount,” he said.
Sepp is also frustrated that the budget plan is lacking important components that make it nearly impossible to project what Obama’s blueprint would do.
“Even though it is once again late, it is also for the first time incomplete for this administration. There are two key documents in the whole set of budget items that are missing so far. These are the analytical perspectives and the historical tables of the budget. Without those, you can’t necessarily understand the assumptions for things like projections of beneficiary populations for the changes in entitlements they’re proposing. For an administration that prides itself on transparency, this is just basic managerial negligence,” said Sepp.
The Obama administration claims the new revenues needed to pay for the proposed spending will come from closing tax loopholes for the rich. Sepp gave us some insight on what officials mean by “rich” and “loopholes”.
“By loopholes, they mean things like imposing the so-called Buffett Rule on wealthy taxpayers. That’s been a staple of Obama’s budgets year after year. They want to propose a shift in rules regarding to what’s called carried interest income. That has a great deal of controversy over how it would impact risk-taking fund managers and their investors,” said Sepp.
“They also want to take a serious bite out of the value of itemized deductions, limiting them to what somebody in the 28 percent as opposed to the 39.6 percent tax bracket would take,” he said.
Sepp says Americans should also remember these tax changes would be on top of the tax hikes that came early last year as part of the deal to avert the so-called fiscal cliff.
House Republicans are expected to unveil their budget blueprint in the coming weeks. While Sepp is highly critical of Obama’s fiscal stewardship and record-setting deficits, he says Republicans do not often propose budgets that would make much of a dent in our losing battle against the debt.
“There have been some problems with Republican budgets in the past. If we were to grade them, many might wind up in the B- and even the C range because many of them fail to address the primary drivers of cost growth, which is Social Security and Medicare in the federal budget. They’ve done some work on voucherization of Medicare and things like premium support. That’s encouraging,” said Sepp.
“But reforming Social Security remains something that neither political party seems to want to touch. Of course, Republicans have not been forthright about the need to restrain military expenditures in the past. That is an important task that both parties have to undertake,” he said.
