Obama budget seeks to fuel social change Despite chilly GOP response, some candidates are addressing income gap

Obama

WASHINGTON — President Barack Obama presented a budget Monday that is more utopian vision than pragmatic blueprint. It proposes a politically improbable reshaping of the tax code and generous new social spending initiatives that would shift resources from the wealthy to the middle class.

Absent from the plan is any pretense of trying to address the main drivers of the long-term debt — Social Security and Medicare — a quest that has long divided both parties and ultimately proved impossible. The document instead indicates that Obama, after years of being hemmed in on his fiscal priorities because of politics and balance sheets, feels newly free to outline an ambitious set of goals that will set the terms of a debate between Democrats and Republicans and shape the 2016 presidential election.

“It’s a visionary document and basically says, ‘You’re with me or you’re not,’ and we can have big philosophical arguments about the role of government, and perhaps in 2016 we will,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and a former top economic adviser to Vice President Joe Biden.

The budget reflects the degree to which Obama emerged from last year’s midterm congressional election losses determined to dig in — rather than scale back — on his belief that the government should play a fundamental role in spreading economic prosperity throughout the country.

Badly losing the midterm elections “has led them to get outside of a pretty narrow box they were trapped in, and they’re thinking far more broadly and creatively about ways in which policy can help reconnect economic growth and middle-class prosperity,” Bernstein said.

“They’re framing a debate with bigger fish in mind than an annual budget. They’re thinking pretty energetically about what ought to be done, versus what can be done.”

The result is that Republicans have dismissed Obama’s budget as dead on arrival, branding it as a tired retread of the job-killing, big-spending policies that he and his party have long favored.

“Today President Obama laid out a plan for more taxes, more spending, and more of the Washington gridlock that has failed middle-class families,” Speaker John A. Boehner, R-Ohio, said Monday. “It may be Groundhog Day, but the American people can’t afford a repeat of the same old top-down policies of the past.”

But several potential contenders for the 2016 Republican presidential nomination — including former Gov. Jeb Bush of Florida, Sen. Ted Cruz of Texas, Sen. Rand Paul of Kentucky and Sen. Marco Rubio of Florida — have begun to respond to Obama’s emphasis on wage stagnation and income inequality by talking more publicly about the issue.

At the heart of Obama’s budget is what the president calls “middle-class economics” —plans to help middle-income earners afford necessities such as education and child care and bolster their skills, and to pour federal money into building roads and bridges.

To pay for such initiatives, including free community college and more-generous subsidies for child care and tax credits for education, Obama has outlined a nearly $1 trillion raft of tax proposals that would hit the wealthy and large financial institutions over the next decade.

There are some glimpses of potential common ground in the blueprint, including a proposal for the kind of corporate tax overhaul and infrastructure plan for which Republicans have previously expressed support. A six-year $478 billion plan to build and improve transit, roads and bridges across the country could open the bidding for negotiations on such an initiative.

But Obama’s proposal for paying for it — a one-time requirement that companies pay a 14 percent tax on an estimated $2.1 trillion in profits parked overseas, and a future rate of 19 percent on such earnings — is unlikely to be embraced by Republicans.

Obama’s plan also reflects the opening bid in what promises to be a spirited negotiation with Republicans over how to replace strict spending caps, known as sequestration, on domestic and military programs. The president is proposing to add $38 billion for the military and $37 billion for domestic programs under Congress’ discretion.

Yet the budget confirms that for Obama, the era of searching for a “grand bargain” with Republicans on entitlements and spending — an exercise that alienated liberal Democrats who were loath to consider any measure to rein in Medicare and Social Security — is over.

Entitlement programs would rise from 13.2 percent of the economy this year to 14.8 percent in 2025, while domestic and military spending would fall from 6.4 percent to 4.5 over a decade.