J. Scott Applewhite / AP
Thursday, April 11, 2013 | 2 a.m.
President Barack Obama’s budget, unveiled Wednesday, came along too late in the year to dramatically change the course of the debate over fiscal year 2014. The Senate, as Majority Leader Harry Reid reminded reporters this week, already has “a good budget. It sets our priorities — I think they’re the priorities of the American people and the Democrats.”
And what of the president’s?
“The president has his budget,” Reid said, and left it at that.
Republicans also have passed a budget in the House, one that has probably earned more vitriolic criticism from Democrats in Congress than those in the White House. But the budget process is important to Republicans, who spent much of last year angling for lawmakers to commit to budgeting in the regular congressional order.
“Ultimately, Republicans and Democrats must work out a long-term proposal for the president to sign into law,” Nevada Sen. Dean Heller said Wednesday. “They need to work together, hammer out the differences, and follow the budget process to completion.”
So what exactly is the significance of the president’s budget? Partisan politics being what they are, none of the budget drafts — not that of the Senate Democrats, the House Republicans, nor the White House — will be adopted whole. Like the others, the president’s budget is a marker on the road to some sort of resolution. And it raises a few elements that Nevadans might want to think about.
Preschool and cigarettes
The president first called for free preschool for all 4-year-olds in his State of the Union address, hailing the idea as crucial for the country’s future and promising it wouldn’t add “a dime to the deficit.”
But preschool does cost money — about $750 million, by the estimate of the president’s advisor, to incentivize states to spend more on establishing new preschool programs. Where the state money comes from is a separate conversation. But the cost of the federal government’s contribution, as proposed by the president, would come from a 94-cent increase in the federal tobacco tax. That would almost double federal tobacco taxes, from $1.01 to $1.95. But as the White House points out, it would also “have substantial public health benefits, particularly for young Americans.”
Chained CPI in Social Security
Those who like the idea call it a smart way of better tying Social Security benefits to a more accurate measure of inflation. Those who hate it say it’s a money grab and an attempt to raid the cash stocks of a healthy program to balance the deficit on the backs of those most vulnerable.
What it is, as the White House has laid it out, is a change in the way Social Security payments would be calculated that would save about $230 billion over the next 10 years. The “chained CPI” calculation would do that by reducing future cost-of-living adjustments through a measure of inflation that assumes when beneficiaries’ budgets are tight, they will substitute expensive products with cheaper alternatives. Generic for name brand. Canned vs. fresh. That sort of thing.
But the president and Sen. Harry Reid (who is very protective of Social Security) are not as far apart on changing Social Security calculations as it might seem.
“To be clear, the package I am offering includes some difficult cuts that I do not particularly like,” Obama wrote in his budget. “But these measures will only become law if congressional Republicans agree to meet me in the middle by eliminating special tax breaks and loopholes so millionaires and billionaires do their fair share to cut the deficit.”
In other words, a grand bargain — which is exactly the terms in which Reid said he would be willing to consider such a proposal.
Renewable energy production tax
There’s no radically new tax programs to promote renewable energy in the president’s budget. But he does seek to make a few familiar ones permanent. Chief among them is the Renewable Energy Production Tax Credit, a program to provide tax credits to companies that actually get down to the business of producing renewable energy. Production tax credits have also received fairly widespread, bipartisan support in Nevada. But Obama’s proposal would tweak the existing renewable production tax credit to make it refundable — meaning that small, startup renewable energy manufacturers with too-low tax obligations to benefit from a tax write-off could actually turn that tax credit into cash they can reinvest in the project. The government’s last attempt to offer monetized tax incentives expired at the end of 2011.
It falls far short of the $500 billion over 25 years most experts believe it would take to really develop a national high-speed rail system, but the president still estimates that the $40 billion he proposes putting toward high-speed rail development over the next five years will help advance “an integrated national rail strategy” that “will provide 80 percent of Americans with convenient access to a passenger rail system featuring high-speed service within 25 years.” No word in the budget about the specific fate of XpressWest.
Obama’s budget would direct about $50 billion toward direct investment in roads, bridges, highways and other infrastructure. But he envisions finding billions more through two less direct funding mechanisms: a National Infrastructure Bank, which would be able to leverage public and private capital to underwrite or invest in major infrastructure projects, and new America Fast Forward municipal bonds, designed to be the next generation of the recession-era Build America Bonds that helped credit-strapped states and municipalities borrow money to put towards capital improvement projects at reduced rates. Between 2009 and 2010, the Build America Bonds supported about $181 billion worth of capital projects, $2.5 billion of which went to 25 entities in Nevada.
More from mining
Congress has largely put off Obama’s past attempts to extract more environmental restoration money form the mining industry through new royalties and fees, but that hasn’t kept the president from trying again in 2014. Obama proposes a royalty on select hardrock mining industries — including gold, silver and copper — and a new abandoned mine lands fee — much like the one currently levied on the coal industry — to pay for the cleanup of hazardous sites. Once the money is collected, it would be up to states, tribes and federal agencies to determine the prioritization of projects; for those on nonpublic lands, the federal government would issue guidelines for how to set those priorities.
Obama's housing policy has prompted criticism from both supporters and opponents in Nevada, as most of the recession-response programs his administration designed to stabilize the housing market did little or nothing to help those in the direst situations. Though the administration has taken progressively broader steps to help the hardest hit, the programs that the president outlines are similar to as those that came before: He wants to expand neighborhood stabilization grants and fund Project Rebuild, a public-private venture to try to reduce vacancies through land banks and loan subsidies.
Obama announced his plan to increase the minimum wage to $9 per hour by the end of 2015 in this year’s State of the Union address. The minimum wage is presently $7.25. Last year, the National Low Income Housing Coalition estimated that in Nevada, an employee paid minimum wage would have to work 92 hours per week to be able to afford a two-bedroom apartment at fair market rent.
Veterans administration backlog
The president’s budget requests $136 million to pay for a claims intake program at the Veterans Administration, which is presently posting record backlogs — especially in Nevada — for claims processing. It’s a problem that has raised bipartisan concerns — and a variety of different approaches to easing the frustration the backlog results in for veterans. In Congress this week, Nevada Sen. Dean Heller introduced a bill that aims at the same problem via a different approach: a requirement that federal agencies — particularly the Social Security Administration, the Department of Defense, and the National Archives and Records Administration — respond to VA inquiries related to claims in 30 days or less, a calendar that should significantly reduce the amount of waiting time VA administrators are required to build into the claims review process.
Social Security isn’t the only part of the retirement equation the president’s budget touches upon: He also wants to standardize Individual Retirement Accounts, or IRAs, so that employees of companies that do not offer private retirement programs can have access to a retirement account. (Said employees would have the right to opt out, if they so wanted.) On the other end of the spectrum, Obama is also seeking to put a cap on how much money any individual taxpayer can hole up in their various IRAs. The president sees an opportunity to raise $9 billion in government revenue by capping a person’s total IRA balance at about $3 million (more specifically, the amount it would take to finance retirement at about $205,000 per year).
During the campaign, Obama and his Republican challenger, Mitt Romney, seemed to agree that one way to reform taxes and find revenue for the government was to put a cap on how many deductions an individual could claim. Obama’s budget formalizes the number he was floating during the campaign: Under his request, no one’s itemized deductions could bring their tax liability down to less than 28 percent of their income.