Obama’s Last Budget, and Last Budget Battle With Congress


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Copies of President Obama’s 2017 budget in the Senate Budget Committee room on Tuesday.

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Drew Angerer for The New York Times

WASHINGTON — President Obama on Tuesday sent his final annual budget proposal to a hostile Republican-led Congress, rejecting the lame-duck label to declare that his plan “is about looking forward,” with new initiatives that include $19 billion for a broad cybersecurity plan.

The budget for fiscal year 2017, which starts Oct. 1, would top $4 trillion, although just over one-quarter of that is the so-called discretionary spending for domestic and military programs that the president and Congress dicker over each year. The rest is for mandatory spending, chiefly interest on the federal debt and the Social Security, Medicare and Medicaid benefits that are expanding automatically as the population ages.

The deficit would increase in this fiscal year to $616 billion from $438 billion last year, the budget projects, in part because of tax cuts that Mr. Obama and Congress agreed in December to make permanent. That would make this year’s shortfall equal to 3.3 percent of the economy’s output, or gross domestic product, up from 2.5 percent and exceeding the 3 percent threshold that economists consider sustainable for a growing economy.

Mr. Obama’s proposed 10-year savings — some spending cuts, but primarily almost $3 trillion in higher taxes from wealthy individuals and some businesses, including a $10-a-barrel fee on crude oil – would push deficits down again for a couple years and offset costs of the president’s proposed initiatives.

Then deficits would begin increasing again with the retirement and health costs of aging Americans. The administration says annual deficits would remain below 3 percent of the gross domestic product through the decade to 2026, but the accumulated debt held by the public would grow from $14 trillion currently to $21.3 trillion in that time. Measured against a growing economy, the debt would stabilize at about 75 percent of gross domestic product.

While Mr. Obama has achieved little to restrain the growth of the entitlement programs that many consider unsustainable, deficits would not return to levels exceeding $1 trillion, and nearly 10 percent of gross domestic product, like he inherited in 2009, his budget projects.

That prompted the legacy-minded president to take something of a victory lap in his budget’s opening message. Striking an optimistic tone that contrasted sharply with the doomsday talk from Republican presidential candidates and congressional Republicans, he wrote, “Together, we have brought America back.”

“We’ve made a lot of progress over the past seven years on our economy,” he later said at the White House. “Unemployment is down. Deficits are down. Gas prices are down. Job creation, wages, the rate of Americans with health coverage are all up.”

“America is as strongly positioned as any country on earth to take advantage of the opportunities of the 21st century,” Mr. Obama added.

Republicans disagreed.

“This budget joins his others by placing America on a fiscal path that is unsustainable and threatens our long-term economic growth,” said Senator Michael B. Enzi of Wyoming, chairman of the Senate Budget Committee.

Mr. Enzi and the chairman of the House Budget Committee, Representative Tom Price of Georgia, have said they will not invite Mr. Obama’s budget director, Shaun Donovan, to testify before their panels — a break with a tradition dating to the start of the modern budget process in 1975 and a snub that captured the hostility that Mr. Obama’s agenda faces.

House Speaker Paul D. Ryan, Republican of Wisconsin, dismissed the president’s budget as “a progressive manual for growing the federal government at the expense of hard-working Americans,” noting that the oil tax alone could add 24 cents a gallon to gasoline prices. Mr. Obama proposed the tax to pay for more than $300 billion in infrastructure improvements over 10 years.

The president said he had spoken to Mr. Ryan about the cybersecurity initiative, which is the centerpiece among new proposals that could garner bipartisan support, administration officials say, despite Republicans’ condemnation of the budget as a whole.

“This is not an ideological issue. It doesn’t matter whether there’s a Democratic president or a Republican president,” Mr. Obama said.

The $19 billion cybersecurity request reflects a 35 percent increase above current spending. Part of that, a $3.1 billion proposal to overhaul the government’s computer systems, was prompted by a huge embarrassment: the Chinese theft of security records on 22 million Americans from the system run by the Office of Personnel Management.

The discovery prompted a major review of the government’s “legacy” computer systems that concluded, as numerous government-sponsored reports had warned for years, that the systems were simply not designed to withstand modern cyberattacks.

While Mr. Obama campaigned on cybersecurity in 2008, he rarely has talked about the broader lessons of the Office of Personnel Management incident. But on Tuesday he said the problem was so severe that some government systems, including for Social Security and the Internal Revenue Service, were running on software systems dating to when he was a child in the 1960s. “If we’re going to really secure those in a serious way, then we need to upgrade them,” he added.

Mr. Obama also announced a commission to examine broader cybersecurity problems, which will report just weeks before he leaves office.

As for the rest of the $1.2 trillion in discretionary spending in the budget, about half would go to domestic programs and half to the military.

To pay for his initiatives and reduce deficits, Mr. Obama added to a raft of tax proposals he has proposed for years to close loopholes and limit breaks for the wealthy and some businesses. Cigarette taxes would go up to finance universal prekindergarten, and other new revenues would go toward initiatives including worker retirement savings options, wage insurance, college assistance and an expanded earned-income tax credit for childless workers — an idea Mr. Ryan has proposed.

Some administration officials said the nearly $3 billion in tax increases would achieve rough parity in deficit reduction efforts after five years in which Mr. Obama and congressional Republicans have cut $4 billion in spending to reduce deficits.

Republicans rebuffed the proposed tax increases, as they have in the past. Yet a few of Mr. Obama’s revenue ideas in the past ultimately have been embraced in bipartisan budget deals to offset the costs of initiatives popular in both parties.

Administration officials pointed to a number of initiatives that could draw support from some Republicans, especially senators vulnerable in this election year. Such initiatives include increased spending to treat people addicted to opioids and heroin; cancer research; efforts to overhaul the criminal justice system; and stepped-up fighting against the Islamic State.

Correction: February 9, 2016

An earlier version of this article misstated the amount of the budget that would be set aside for discretionary spending. It would be $1.2 trillion not $1.2 billion. The article also misstated the amount of the deficit last year. It was $438 billion, not $503 billion. The error was repeated in a summary of the story on the homepage.



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