Delayed Obama Budget Misses Raised Expectations

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Power Play 4/10/2013

Manchin and Toomey try to salvage gun deal and Obama tries to tind budget sweet spot

“I'm not disputing that.”

-- White House Press Secretary Jay Carney in answer to an April 5 question by CBS News’ Major Garrett as to whether President Obama’s proposal to change federal cost-of-living measures would result in higher taxes for middle-income earners.

Higher spending, another round of across-the-board tax hikes and additional cuts to the military.

If that is President Obama’s opening gambit in the effort to find a full-year federal fiscal plan, then he is not nearly as serious about seeking a compromise as the gushy reporting on his “charm offensive” would have you believe.

Obama broke the law to delay delivery of his own budget blueprint, preferring to wait for the House and Senate to proffer their own spending plans before delivering his. Given the unprecedented delay, expectations were high in Washington for Obama’s budget.

The long-delayed document instead landed with the clang of a horseshoe on cement.

The thinking, reported in many outlets, was that Obama was following an advantageous political path of seeking a middle ground between a very liberal Senate plan and a very conservative House plan. He could let the warring parties stake out extreme positions and then slip in the center-left slot that showed willingness to compromise.

His pre-rollout plan seemed to be working well as the Washington press corps was overcome by the vapors at word that Obama would, albeit reluctantly, propose a reduction to future increases in entitlement benefits.

Liberals bayed over the idea that the government would adopt a less generous formula for offering cost-of-living increases to Social Security recipients. This was, of course, the idea. Hearing Sen. Bernie Sanders, the self-described socialist from Vermont, and others on the left thunder about any decreases to increases in entitlement benefits, reporters immediately assumed that Obama was bucking his own political base.

But as the reality of Obama’s proposal crept into the standard Washington conflict narrative, it proved to be far less than advertised. What Obama proposes is changing the way the government calculates the cost of living for everything. While that does mean less generous increases for pensioners and the disabled, it also means shoving more folks into higher tax brackets. It’s an entitlement cut and a tax hike in one.

Team Obama forecasts that the deficits of the next decade would be reduced by $230 billion as a result of re-jiggering the cost-of-living formula. But that’s not the same as trimming entitlements by that sum. The Obama plan for reducing the increase in the federal debt also assumes that more middle-class earners will be shoved into higher tax rates as the same calculation would apply to income tax brackets.

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What economists call “chained CPI” is not entitlement reform at all. It is accounting reform. And while conservatives have supported the idea in the past, they’ve never much backed the plan as a stand-alone idea. Slowing entitlement insolvency a bit isn’t enough to merit higher taxes in the minds of most on the right.

And when it comes to taxes, Obama is offering much, much more.

His budget team has laid out another suite of tax hikes on top earners nearly as large as the one passed by Congress in January – some $580 billion worth – including reductions to deductions and caps on how much can be protected in tax-exempt retirement savings programs.

The other big source of decreasing the increase to the debt comes from Obama’s own 2010 health law. The administration promises $400 billion in deficit reduction from “health savings that build on the health reform law.”

But that law is not ready to be implemented. Not by a long shot. Obama’s new entitlement program, set for full deployment in October, is gasping and wheezing as states battle back against federal demands and insurance companies warn of dramatically higher premiums for all once the nation reaches the point of first contact with what the president calls “Obamacare.”

Kathleen Sebeilus, Obama’s health secretary, told an audience at Harvard on Monday that the administration was surprised by the difficulty in implementing the law. She must not have copied the budget office on her memo.

The Obama budget also depends on some rather cheery forecasts for growth. Remember that Obama’s prior growth prediction have been way off. For 2012, for example, Obama once forecast 4 percent growth in the economy. It was half of that.

Add in a call for $50 billion in new stimulus spending and you have a document that offers little for Republicans to like and even less in the way of new thinking.

Obama will dine with another group of GOP senators tonight in his continuing effort to find the first full-year fiscal plan since he took office, but the budget he offered today will not much whet their appetites.

Chris Stirewalt is digital politics editor for Fox News, and his POWER PLAY column appears Monday-Friday on FoxNews.com. Catch Chris Live online daily at 11:30am EDT  at  http:live.foxnews.com.