Obama's Budget Vision Is a Good One

On Monday, the White House released its budget for 2016. It’s a monstrously imposing document, full of graphs and tables that detail the 10-year cost projections for each of the thousands of programs it covers. Yet it is also an important document, which outlines a set of ideals that can take the country in a positive direction with new policies for corporate accountability, changes in the tax code to combat income inequality, funding for infrastructure and higher education, and tax credits directed towards middle- and lower-income families.

The sad reality is that this document is almost entirely symbolic, as there is no chance that the Republican-controlled Congress will pass it in its current form. The Obama budget proposes $4 trillion of total federal spending for the 2016 fiscal year, the largest portion of which will go towards the Departments of Health and Human Services, and GOP leaders have dismissed it out of hand. Some of the budget’s bipartisan proposals could, however, serve as the basis for compromise, though the chances for such an outcome seem slim.

Obama’s budget plan does not envision that the budget will be balanced anytime soon. Rather, it aims to stabilize the federal budget deficit over time by shrinking it as a percentage of GDP. The $474 billion dollar deficit forecast for 2016 represents 2.5 percent of American GDP. In 2015, the deficit to GDP ratio was 3.2 percent. A balanced budget would, of course, be preferable, but given the continued rise in health care costs and an aging population, the plan accomplishes some progress on deficit reduction.

In line with the president’s proposals in the State of the Union address last month, the White House is pitching the budget as an example of “middle class economics.” Among the excellent policy ideas here are a tax credit for families with two working parents, $3 billion for STEM education, and billions in new funding for ESL, Head Start, and teacher training and counseling programs. The budget also sets aside $500 million more for Preschool Development Grants, to help “targeted communities” fund universal preschool programs. In addition, the president proposes new programs for tuition-free community college, low-interest student loans, and tax credits for higher education.

To pay for these programs, the White House budget would raise capital gains taxes and close corporate tax loopholes. Over the past several years, many U.S.-based multinationals have found ways to dodge the taxman by keeping their foreign earnings overseas in countries with lower corporate tax rates, rather than bringing the money back to the United States. The budget proposes a 14 percent minimum tax on over $2 trillion of these “unrepatriated earnings,” and proposes taxing future earnings at 19 percent. These new policies would raise $248 billion over five years, money that the president wants to fund infrastructure projects and recapitalize the barely solvent Highway Trust Fund.

As noted above, the president’s budget also has ideas that Republican policymakers should be eager to support. First among these is reversing the damaging cuts to the military unleashed by the sequester. In addition, the president’s plan to fund the High Trust Fund is “not too different from one put forward by Senator Rand Paul,” according to The New York Times.

From promoting education to working towards revitalizing America’s infrastructure, the Obama budget aims to strengthen American communities and the country's economic competitiveness. Republicans have made clear their opposition to the plan as a whole. One can only hope that they will be willing to negotiate on the common ground that does exist, however small.