President Barack Obama plans to send his fiscal 2014 budget to Congress in mid-March, a budget official said, delaying the fiscal blueprint as the administration and congressional Republicans wrangle over taxes and spending.
The official revealed the timing on condition of anonymity because the target date for the release hasn’t been announced. It comes after Republicans criticized the White House for not meeting the legal budget deadline of the first Monday in February.
“For the fourth time in five years this White House has proven it does not take trillion-dollar deficits seriously enough to submit a budget on time,” House Speaker John Boehner, an Ohio Republican, said in a statement yesterday.
White House press secretary Jay Carney, while declining to say when the budget would be ready, yesterday accused House Republicans of putting forward “highly partisan” spending plans that have “no support among the American public.”
The administration has been signaling that the annual spending blueprint wouldn’t meet the deadline because of the protracted debate in Washington over taxes, spending and the deficit, especially the dispute at year’s end that focused on tax rates. Congress ultimately approved a measure averting income-tax increases for most Americans while allowing rates to rise on taxable income of individuals up to $400,000 and of married couples of up to $450,000.
‘Forced to Delay’
Acting White House budget director Jeffrey Zients wrote in a letter last month to Representative Paul Ryan, the Wisconsin Republican who is chairman of the House Budget Committee, that because the tax deal wasn’t reached until Jan. 1, the administration was “forced to delay some of its FY2014 budget preparations, which in turn will delay the budget’s submission to Congress.”
The White House and Congress are facing two fiscal deadlines next month. On March 1, $1.2 trillion in automatic federal spending cuts are scheduled to take effect.
Congress created the automatic cuts in August 2011 as part of an agreement to raise the U.S. debt ceiling. In the legislation passed Jan. 1, lawmakers delayed the spending cuts, half of them coming from defense, for two months.
The government is currently operating under a stopgap budget that expires on March 27. If spending authority isn’t extended, government agencies face a shutdown.
The delay for Obama’s budget isn’t likely to change the political debate over fiscal issues. The president has said he’s planning to again seek funding for many of the proposals contained in last year’s $3.8 trillion budget, which was never adopted by Congress.
“It’ll look a lot like the old one,” Michael Linden, director of tax and budget policy at the Center for American Progress, said yesterday at a conference in Washington focused on fiscal issues. Any spending cuts or revenue increases, he said, will be “basically the same” as last year’s budget blueprint.
Obama reinforced that during an interview with CBS News broadcast on Feb. 3. He said he wants to seek additional revenue by trimming tax breaks for top earners and the treatment of profits in buyout deals, known as carried interest. Those profits are often taxed as capital gains, which receive preferential rates under the tax code compared with levies on wages; Obama has advocated treating the profits as ordinary income for tax purposes.
“There is no doubt we need additional revenue, coupled with smart spending reductions, in order to bring down our deficit,” the president said.
Taxing private equity managers’ carried interest as ordinary income would raise about $16.8 billion, according to the nonpartisan Joint Committee on Taxation.
Obama has proposed limits on the value of deductions, capped at 28 percent for households earning more than $250,000, and has called for ending tax breaks for oil and natural gas companies, which would collect $41 billion over 10 years, according to last year’s budget estimate.
Panelists at the conference on budget issues said any proposals on taxes in Obama’s fiscal 2014 budget would take at least a year or more to get through Congress.
Stan Collender, a former congressional budget analyst, said that while “they may be talking about it” this year, he tells his financial clients at Qorvis Communications LLC that nothing serious will happen on tax changes until the end of 2014 or into 2015.
“The president’s budget is just a proposal,” he said. “It has no meaning other than a political statement at the time it’s made.”