What You Need To Know About Obama's Budget

A blog about business and economics.
April 10 2013 6:15 AM

The Key Contrasts in the Budget Debate

A copy of President Barack Obama's budget proposal for FY 2014 comes out of a printing press at the Government Printing Office, April 8, 2013, in Washington, D.C.
A copy of President Barack Obama's budget proposal for FY 2014 comes out of a printing press at the Government Printing Office, April 8, 2013, in Washington, D.C.

Photo by Alex Wong/Getty Images

Barack Obama's Fiscal Year 2014 budget proposal was released at 6 a.m. this morning. Naturally, I haven't had time to read it in detail, but lucky for you, dear readers, I did get briefed yesterday so I know roughly what it says. Based on that and the House budget written by Paul Ryan earlier this year, I think you can see three key points of contrast:

Rich vs. poor: In a way this is cliché, but it's also quite important. Paul Ryan balances the budget without increasing taxes or reducing military spending or cutting Social Security or cutting Medicare benefits for people aged 55 and older primarily by cutting spending on poor people. Food stamps? Cut. Medicaid? Cut. Pell Grants? Cut. If the idea of the program is to bolster the living standards of the least fortunate, the GOP budget cuts it. By contrast, Obama expands Medicaid, increases EITC and Child Tax Credits, makes the Opportunity Tax Credit permanent, and spares the poor from the cuts involved in adoping the chained CPI. How does he do it? Well, he does it in several ways, but one big part of the story is reducing tax deductions for rich people. Ryan, by contrast, reduces deductions across the board in order to lower rates on the rich.
Young vs. old: Ryan's budget is a masterpiece of coalition politics, managing to cut spending a lot while minimizing cuts in spending on people who are old today—i.e., on Republicans. Obama's budget, by contrast, doubles down on the kind of Medicare "savings" found in the Affordable Care Act and creates headroom for a large expansion of pre-K services. Ryan keeps the sequestration cuts to education, and Obama reverses them.
Jobs vs. austerity: The Obama administration's rhetoric has long since abandoned the concept of stimulus, but yet again we have a budget proposal for some meaningful short-term economic stimulus in the form of a $50 billion infrastructure program. Perhaps more importantly, the Obama budget would replace sequestration with alternative deficit reduction that's phased-in in a more sensible way. The House budget, by contrast, is immediate austerity. I think it's difficult to gauge the real Federal Reserve policy response function and thus the ultimate impact of this difference, but, broadly speaking, the direction of change is knowable—Obama's budget would mean more job growth over the next 12-18 months.
Advertisement

Now obviously this budget isn't going to be passed by the House. And at the same time, the White House isn't going to make the kind of concessions that House Republicans are angling for—a budget that's all cuts and no tax hikes. So in a sense, delving into the details doesn't even matter here. What's important here is the larger ideological clash, and it's well-captured by those three points of contrast.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Politics

The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

Politics

Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

Hasbro Is Cracking Down on Scrabble Players Who Turn Its Official Word List Into Popular Apps

Florida State’s New President Is Underqualified and Mistrusted. He Just Might Save the University.

  News & Politics
Politics
Sept. 30 2014 9:33 PM Political Theater With a Purpose Darrell Issa’s public shaming of the head of the Secret Service was congressional grandstanding at its best.
  Business
Moneybox
Sept. 30 2014 7:02 PM At Long Last, eBay Sets PayPal Free
  Life
Gaming
Sept. 30 2014 7:35 PM Who Owns Scrabble’s Word List? Hasbro says the list of playable words belongs to the company. Players beg to differ.
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Sept. 30 2014 3:21 PM Meet Jordan Weissmann Five questions with Slate’s senior business and economics correspondent.
  Arts
Brow Beat
Sept. 30 2014 8:54 PM Bette Davis Talks Gender Roles in a Delightful, Animated Interview From 1963
  Technology
Future Tense
Sept. 30 2014 7:00 PM There’s Going to Be a Live-Action Tetris Movie for Some Reason
  Health & Science
Medical Examiner
Sept. 30 2014 11:51 PM Should You Freeze Your Eggs? An egg freezing party is not a great place to find answers to this or other questions.
  Sports
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.