President Obama held a press conference on Tuesday, defending his $3.7 trillion budget (and his handling of the Egyptian uprising) and taking a few shots at the impatience of the Washington press corps, who want to see a deal with Republicans done yesterday. After all, they’re on deadline, and what could be better than a dramatic bid to cut Social Security? Still, of all the storylines surrounding the budget, there are three important ones that stand out to me, mostly because they’re kind of misleading.
So what are the budget storylines that seem just off base?
1. The Obama budget “goes after students, minorities, and the poor”
While the Pell Grant cut provided for some tough early headlines for the White House, more sober assessments are proving the proposal to be less horrible than advertised. The Pell proposal would leave in place the full $5,500 a year cap for students (Republicans would prefer to slash that amount) while eliminating the second available grant students could get in the same year for summer courses. The summer Pell grant happens to be the one most often used by students at for-profit schools (ie the University of Phoenix.) The administration admits that their Pell proposal would mostly impact the for profit schools, which many people have criticized for taking students for a ride on the federal dime. Currently, the for-profit school industry is engaged in a knock-down, drag-out lobbying push to preserve a number of subsidies the Obama administration is looking to cut loose.
The chairman of the Congressional Black Caucus ripped into the budget on Monday, which may be why the White House planned an eleventh our conference call specifically for black press and community leaders (the mayor of Tallahassee and the editor of the Miami Times were both on the call, along with several chamber of commerce types, and your humble blogger.) The main source of CBC anger centers around proposed reductions in Community Development Block Grants (CDBGs), which help fund low income housing-related programs. CDBGs were also the concern of most of the people on the call, which is probably why before the call, the administration released a list of programs and directives designed to boost MBEs, including a significant boost in aid to Historically Black Colleges and in Small Business Administration funding for programs targeting minorities. And as the WaPo points out, the trade-off in the block grant decreases is a significant boost in funding for programs that help the homeless and those in need of rent assistance. Interestingly enough, there was almost no push-back on the call when the two administration spokespeople, Senior Advisor Valerie Jarrett, and Dr. Cecilia Rouse, a member of the president’s Council of Economic Advisors, explained the CDBG trade-offs.
By far, the biggest contretemps over the budget from liberals have been the Obama administration’s proposed cuts to the state-administered program LIHEAP, which provides energy assistance to the poor.
That cut is drawing the attention of liberal Obama-watchers, who see it as a sign of further capitulation to the right, or even of abject cruelty on the part of the president. And news of the proposed cut created bipartisan agita on Capitol Hill, with Republican lawmakers from West Virginia to Massachusetts condemning the cuts along with the liberal blogosphere.
And while the optics of this particular cut aren’t good, here again, the story isn’t necessarily as bad as the headline.
On the White House Af-Am call, I asked about LIHEAP, and was told it was one of the “difficult” but necessary cost savings the president was proposing. On the call, Rouse explained that LIHEAP had seen its funding essentially doubled in the president’s first two years due to spiking energy prices. Now that prices have leveled out, the White House has decided to return funding to pre-spike levels. However, Rouse said “rest assured, if energy prices spike again, the White House is prepared to bring funding levels back up.” In a follow-up email after the call, a White House spokesman explained that LIHEAP is in fact a block grant, meaning money transfered to the states and administered by them. And because the money is paid directly to utilities, not customers, with energy prices down but the funding still at spike levels, it has essentially served as a federal subsidy to those energy companies.
That message was reinforced by DNC chief Tim Kaine yesterday, when he pointed out to the Huffpo:
“What is being cut are the LIHEAP funds which are transferre d to weatheriza tion programs, which have already been funded by the stimulus. Without these cuts, taxpayers would essentiall y be paying for the same weatheriza tion programs twice.
President Obama is keeping his promise to cut tax loopholes and subsidies, in this case, subsidies for energy companies. As the National Journal article points out, critics say that the program is poorly administer ed and that, contrary to intentions , it’s become a subsidy for energy companies.”
By the way, those who are painting the budget as draconian should remember that Obama’s 2012 budget is actually larger overall than the one he submitted a year ago — one that was praised by liberals at the time for its progressiveness. And not for nothing, but the budget does raise taxes and cut oil and gas subsidies, no small things.
The second knock on the budget that strikes me as less than accurate?
2. It doesn’t go far enough to cut the deficit
First off, it’s important to remember that the president’s budget is just the opening salvo of a very long, involved process that involves three parties: the president, the House of Representatives, now controlled by the GOP, and the place where all appropriations begin, and the Democratic-controlled Senate. As an opening bid, the highly respected Center on Budget and Policy Priorities gives the Obama budget proposal a good review, particularly since it actually does cut the deficit.
In fact, CBPP said the budget proposes a “responsible, workable path toward deficit reduction” that casts Obama as definitively grown up in comparison to the predictable mouth frothing of the tea party GOP, which is promising to go much further, with largely symbolic, but potentially devastating cuts to things like public broadcasting (which costs Americans about $1.37 each per year), infrastructure, eliminating HBCU funding, and slashing away at education, healthcare and poverty programs in a way that would make the LIHEAP cuts look like a Christmas gift.
Which brings us to the third knock on the Obama budget:
3. It “punts” on entitlements
Here, the knock is actually kind of true, but that strikes me as kind of a good thing. Indeed, the administration has, via its budget, and the talking points administration officials from Budget director Jack Lew on have been deployed with, made it clear that it sees discretionary spending and the deficit issue as immediate, but Social Security in particular as a long term issue. That’s important, because the fearmongering from both elected and media people on the right has been to paint Social Security as in immediate, dire need of cutting. That’s convenient to say if, like most Republicans, you want to slash Social Security and Medicare anyway, because philosophically, you’re opposed to the programs in the first place. (Though only Ron Paul is bold enough to sell his “financial crack to the young” openly. Others, like Paul Ryan, just propose handing the programs over to insurance companies and Wall Street.)
By decoupling Social Security from the budget debate, Obama has put that issue in the right context. Social Security has its own funding source, and so really shouldn’t be a part of that debate. Medicare is another matter, and it does indeed face a cost crisis. But it wouldn’t profit the president to put himself out front proposing cuts to cherished programs of America’s seniors and baby boomers, just before an election year. (And don’t think Republicans don’t know that, which is why they’re loathe to give specifics on their own plans for “entitlement reform”, but are practically demanding the president go first.)
If the Republican Party wants to go after those programs — and they do — politically, the right thing to do is to let them do it themselves.
Related: a good budget breakdown.