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No more ‘sequester’: Can Obama’s budget gambit work? (+video)

President Obama previews a key element in his 2016 budget proposal: the end of automatic spending cuts known as the 'sequester.' Many Republicans also don't like the sequester, but they reject Obama's remedy. 

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    The White House Thursday said President Obama's proposed budget is the beginning of a negotiation.
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President Obama wants to get rid of the “sequester” – the automatic, across-the-board spending cuts to the federal budget that started in 2013. And in his 2016 budget proposal, slated for release Monday, those cuts will be gone, the president will tell House Democrats at a retreat Thursday night.

The economy is growing and deficits are down, and the time for “mindless austerity” has ended, the White House says. Instead, Mr. Obama will propose increases in both domestic and military spending to the tune of $74 billion, or 7 percent, above the existing spending caps. Tax increases on the wealthy would pay for those spending hikes.

Many Republicans also don’t like the sequester. “Republicans believe there are smarter ways to cut spending,” says Cory Fritz, communications director for House Speaker John Boehner (R) of Ohio.

But Republicans also don’t like tax hikes, and they now control both houses of Congress. Obama’s plan – as with all presidential budget proposals -- surely will not become law. But that’s not the point. It’s an opening bid, and as with Obama’s State of the Union address last week, it’s a flashy one. It also plays into the 2016 presidential race.

Obama is also following the same rollout strategy with the budget as he did with his big annual address to Congress – releasing the details in advance to maximize press coverage and keep Republicans in reaction mode. His budget message is a direct followup to the State of the Union: a bid to pitch himself as a champion of the middle class and the architect of a recovering economy.

“America’s resurgence is real,” Obama wrote in an op-ed posted Thursday at HuffingtonPost.com, headlined “A Blueprint for Middle-Class Economics.” “With a growing economy, shrinking deficits, bustling industry, and booming energy production, we have risen from recession freer to write our own future than any nation on Earth.”

Obama’s budget will include enhanced funding for education, infrastructure, health programs, and national security, as well as tax cuts for the middle class. He plans to pay for these items with “cuts to inefficient spending programs and closing tax loopholes,” according to a statement from a While House official. One tax increase proposal would change the treatment of inherited wealth.

What Obama doesn’t talk about is the ever-growing federal debt – now $18 trillion – and projections that the shrinking annual deficits will grow again as early as 2017, a fiscal scenario that budget hawks call unsustainable. 

But the core of Thursday’s announcement – the bid to end sequestration – was seen as an aggressive challenge to the GOP. Congressional Republicans assert that they too are trying to help the middle class, saying that restrained federal spending will help unshackle the economy and boost stagnant wages.   

On defense spending, some Republicans argue for keeping the spending caps, saying that economies can be made in inefficient programs. But Democrats say that higher defense spending must be contingent on higher domestic spending. 

Pete Davis of Davis Capital Investment Ideas says he expects Congress to do away with the sequester. On the question of how it will be paid for, Davis says, “I think Republicans will come up with some spending cuts in other areas such as Medicare or other programs.”

The sequester came about in the Budget Control Act of 2011, which ended a debt-ceiling crisis and produced a bipartisan “super-committee” assigned to cut $1.5 trillion from the federal budget.  The law called for automatic spending cuts if the committee failed to reach agreement, which is what ended up happening. The cuts went into effect in March 2013.

In December 2013, the then-budget chiefs from the House and Senate – Rep. Paul Ryan (R) of Wisconsin and Sen. Patty Murray (D) of Washington – reached a deal to alleviate some of the budget cuts. But the deal was for just two years. 

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