Obama calls for more infrastructure, education spending in U.S. budget
By JOHN FRITZE and The Baltimore Sun
Mar 04, 2014 | 9:01 PM
President Barack Obama proposed a $3.9 trillion federal budget on Tuesday that calls for spending billions more on infrastructure, raising taxes on the wealthy and closing the gap between rich and poor that he has vowed to make a focus of his second term.
The budget — drafted with this fall's congressional elections on the horizon — includes a host of policies likely to appeal to Democratic voters, such as expanding early childhood education, raising tobacco taxes and boosting a tax credit for the poor.
For Maryland, the spending plan would set aside $100 million in the fiscal year that begins Oct. 1 for Baltimore's Red Line and an equal amount for the Purple Line in the state'sWashington suburbs. Local officials described the provisions as a significant commitment for two of the state's largest transportation projects.
The president's budget is widely considered a nonstarter in Congress — in part because the midterm elections in November will further stoke partisan tensions on Capitol Hill but also because lawmakers havealready approved a budget agreement that sets spending levels for the coming fiscal year.
And yet the proposal provides some insight into the policies Obama will pursue during his final years in the White House, as the economy continues its slow recoveryand Republican leaders in Congress pivot awayfrom the bruising battles over federal budget deficits that culminated in last year's government shutdown.
"Our budget is about choices. It's about our values," the president said Tuesday at an elementary school in Washington.
"As a country, we've got to make a decision if we're going to protect tax breaks for the wealthiest Americans, or if we're going to make smart investments necessary to create jobs and grow our economy."
Republicans, including House Budget Committee Chairman Paul Ryan, immediately dismissed the proposal as unrealistic and political.
"This budget isn't a serious document," the Wisconsin lawmaker and former GOP vice presidential nominee said. "It's a campaign brochure."
But even if none of Obama's budget becomes law, officials believe the spending proposed for Maryland's rail projects is an important signal that the U.S. Department of Transportation is ready to engage in negotiations over funding. The Red Line, with a total estimated cost of $2.6 billion, would run across the city,from Woodlawn through downtown Baltimore to Bayview.
"The transit numbers are really good news," said Sen. Ben Cardin, a Maryland Democrat. "It puts us in line for a full funding agreement."
Donald Fry, president and CEO of the Greater Baltimore Committee, called its inclusion in the president's budget "a significant step [because] it indicates that this project is seen as meritorious."
The proposal included other provisions important for the state as well. Federal employee unions that were critical of the president's budget last year praised the proposal he put forward on Tuesday, noting new spending for workforce training and recruitment. Maryland is home to more than 300,000 federal workers — one of the highest concentrations in the country.
But state officials said they are concerned about other aspects of the budget. The federal program that helps low-income families pay for heating costs would be cut by 18 percent to $2.8 billion if the president's recommendation were approved. That program serves about 114,000 Marylanders.
Funding for one Environmental Protection Agency program focused on cleaning the Chesapeake Bay would increase slightly while another would be cut, essentially leaving spending about the same as this year.
And despite a lot of attention paid to medical research and the Bethesda-based National Institutes of Health, several advocates noted the budget calls for only a small bump — roughly $300 million out of the agency's $30.2 billion budget — next year.
The NIH funds 80 percent of federal biomedical research, including workat major institutions such as the Johns Hopkins University and the University of Maryland.
"Over the past several years there has been significant restraint in growth in the science sector," said Dr. Antony Rosen, vice dean of research at the Hopkins School of Medicine. "The longer that this goes on, the more it imperils [the nation's] future as the leader of scientific discovery."
A year ago, Obama used his budget to try to draw Republicans into negotiations on a large-scale deal to cut the long-term federal deficit.
This year, with the deficit declining, such enticements were largely missing. Most notably, Obama droppedthe so-called chained CPI, popular among Republicans but opposed by some Democrats. The approach aims to slowthe growth of Social Security payments by changing how cost-of-living increases are calculated.
Obama's current plan would cut the deficit by adjusting the way the government means-tests Medicare, leading tohigher premiums for some wealthy seniors. He included measures to force down the cost of prescription drugs, which wouldalso reducefederal spending, and assumed savings fromhis proposals to overhaul the nation's immigration laws.
He proposedpaying for new spending — a $55 billion "Opportunity, Growth and Security Initiative" — by closing tax loopholes used primarily by the wealthy and byraising taxes on tobacco. Among the tax provisions he would eliminate is the carried-interest rule, which allows some hedge fund managers to pay a lower tax rate on a significant share of their income.
Obama would expand the Earned Income Tax Credit, which supplements wages for low-income workers. His plan would focus on childless workers, who currently get minimal benefit from the long-standing tax credit, broadening their eligibility and doubling the maximum they could receive to $1,000.
The proposal would cost $60 billion over 10 years and would give a tax break to 13.5 million people, the White House said.
Overall, Obama's budget details $3.9 trillion in federal spending in fiscal year 2015 and $3.3 trillion in revenue, leaving $564 billion in shortfall.
That deficit comes to just over 3 percent of gross domestic product — roughly the same level as before Obama took office and down from almost 10 percent in 2009. The White House says its plan would reduce the annual deficit to 1.6 percent of gross domestic product in 10 years and begin shrinking the debt as a share of the economy.
The Tribune Washington Bureau contributed to this article.