Obama Drops ‘Good Faith’ Offer From Budget

Administration blames Republican intransigence after pulling back an offer meant to entice GOP into negotiations

  • Share
  • Read Later
Pablo Martinez Monsivais / AP

President Barack Obama sits with House Speaker John Boehner during memorial service for former House Speaker Tom S. Foley, Oct. 29, 2013, in Statuary Hall on Capitol Hill in Washington.

President Barack Obama’s budget blueprint for the next fiscal year will drop a entitlement program fix he once embraced, in the latest acknowledgement that little progress will be made on the nation’s fiscal issues ahead of the midterm elections.

The measure, which would adjust the way inflation is calculated for the purposes of Social Security and other federal programs, was included in Obama’s budget for the current fiscal year, but will not be in his proposal for fiscal year 2015, which will be released next month. Officials blamed Republican intransigence for the pull back, calling it a return to regular budgetary order, where the president’s budget reflects his starting position instead of a potential middle-ground. It also reflects an improving fiscal climate and the administration’s efforts to shift the discussion from financial austerity to economic investment.

“Last year’s was a little bit different, that the president presented a unique budget offering to reflect the circumstances,” White House spokesman Josh Earnest said Thursday. “There was a point in time when there was a little bit more optimism about the willingness of Republicans to budge on closing some tax loopholes. But over the course of the last year, they’ve refused to do that.”

Democrats cheered the decision. “House Democrats have stood behind President Obama’s honest efforts in recent years to forge a bipartisan grand bargain with congressional Republicans,” House Minority Leader Nancy Pelosi said in a statement. “In the course of those negotiations, he put chained CPI on the table as a gesture of good faith; yet Republican leaders were unwilling to budge or close a single unfair tax loophole, and decided to walk away from opportunities to find common ground.

“Democrats applaud the President for eliminating chained CPI from his budget, and we look forward to working across the aisle to adopt a responsible fiscal framework,” she added.

Meanwhile, House Speaker John Boehner blasted the White House through a spokesman.

“This reaffirms what has become all too apparent: the president has no interest in doing anything, even modest, to address our looming debt crisis,” spokesman Brendan Buck said. “The one and only idea the president has to offer is even more job-destroying tax hikes, and that non-starter won’t do anything to save the entitlement programs that are critical to so many Americans. With three years left in office, it seems the president is already throwing in the towel.”

In the wake of the 2012 “fiscal cliff” negotiations, Obama included the so-called chained-consumer price index in his offer to Congress, fulfilling what the administration says was one of two main Republican demands for a grand bargain. At the time, the White House said the offer was conditional on broad-based tax reform that never came about. Now Obama is pulling back his hand, and abandoning a policy shift that was anathema to a large swath of Democrats who have built their political identities around defending entitlement programs.

The budgetary fix was estimated by the White House to save $230 billion over a decade, but the White House says that regardless, Obama’s budget, owing partly to rosier economic predictions, will project the federal budget deficit at under two percent of GDP within 10 years. Senior administration officials said the recovering economy and improving fiscal picture lessened the imperative for swift action on entitlement reforms, but they acknowledged that action will eventually have to be taken to ensure the sustainability of social insurance programs.

Obama’s budget will also include $56 billion in additional federal spending, split evenly between defense and non-defense programs. Senior administration officials declined to preview the entirely offering, but said Obama will call for additional manufacturing institutes and a “race to the top” program to incentivize states and localities to embrace energy efficiency legislation. The president will also repeat his call from last year’s budget to extend pre-k education, paid for partly by higher taxes on tobacco products.