What Will Likely Be In The President's Budget
The FY 2014 President's Budget will not be released until next Wednesday, April 10th, but already some details about what will be in the budget have been surfacing.
According to early reports, we can expect this budget to be a little different than the President's past budgets in that the FY2014 proposal will incorporate a many of the policies in the President's final offer to Speaker John Boehner during the fiscal cliff negotiations. Some of these provisions reported so far include:
- The chained CPI: Reports have indicated that the President's Budget will include a more accurate measure of inflation, the chained CPI, for indexing provisions in the tax code, Social Security, and other spending programs. CBO has estimated that this could save $390 billion over ten years (including interest), although savings would be less if protections for the most vulnerable were included, which seems to be the case in the budget.
- Universal Pre-K and other spending initiatives: The President is expected to propose new initiatives for early childhood education, as he previewed in his State of the Union remarks. The additional spending would be paid for by increasing in the cigarette tax, limiting individual retirement accounts (IRAs) to $3 million, and not allowing people to collect both unemployment insurance and disability insurance at the same time.
- Repeal of sequestration: Full repeal of the sequester is expected to cost over $1.2 trillion (including interest) over the next ten years.
- $600 billion in additional revenues from tax reform: Revenue would be raised by limiting the value or eliminating various tax expenditures, including a previously proposed 28 percent cap on deductions and exclusions. Other reports indicate that total new revenues, including reforms to the corporate tax code and other provisions, could be greater than $600 billion and possibly as high as $1 trillion.
- $200 billion in other mandatory savings: Mandatory savings will be achieved by reducing farm subsidies, enacting federal retirement reforms and postal reform, and other provisions.
- $200 billion in discretionary cuts (after the repeal of sequestration): These cuts will likely be split evenly between defense and non-defense.
- Roughly $400 billion in health care savings: Health savings are expected to include expanding Medicaid drug rebates to Medicare Part D, increasing means-testing of Medicare premiums, and reducing certain provider payments, among others.
Of course, we will have to wait until the actual budget is released for many of the final details. These early indications suggest the President's Budget will be a bit different than the budget resolutions produced by the House and Senate last month, in that it will contain much more specifics. We will follow up on the release next week with an in-depth analysis of many aspects of the President's budget. Hopefully, it will follow the trend of the FY 2014 budget proposals released so far and put debt on a downward path, but also avoid the use of budget gimmicks and demonstrate a willingness to compromise.
Click here to see what The Campaign to Fix the Debt hopes to see in the President's Budget.