Posted: | Budget Process, Debt & Deficit, Education, Health Care, Military & Security, Social Insurance, Earned Benefits, & Safety Net, Taxes & Revenue, Transparency & Data
President Obama today released his $3.9 trillion fiscal 2015 budget proposal, a plan that includes new manufacturing institutes, job training, and the president’s signature initiative of universal pre-kindergarten education. At the same time, the president proposes increasing military spending.
The new budget contains initiatives that would be widely popular with the American people based on opinion polling. With an emphasis on job training and job creation, new funding for education, and a reduction in corporate tax loopholes, the president has released a budget that reflects many of the people’s priorities.
Here are highlights of what the Obama budget contains:
In addition to the spending levels set out by Congress last year, President Obama proposes additional funding in an “Opportunity, Growth and Security Initiative.” The $56 billion in new spending would be evenly split between military and domestic programs, for a total of $1.19 trillion in discretionary spending in 2015, an increase of about 1 percent relative to 2014 enacted levels. The new spending would support universal pre-kindergarten education, manufacturing institutes, job training and apprentice programs, as well as military activities.
The president projects $3.34 trillion in tax revenue in fiscal 2015, an increase of 11 percent relative to 2014. The increase is due to improvements in the economy as well as tax reform proposals that include limiting tax breaks for corporations and wealthy individuals. Measures that would tighten tax breaks for wealthy taxpayers would bring in an additional $37 billion in revenue in fiscal 2015 and $651 billion over the next 10 years.
The budget would expand the Earned Income Tax Credit (EITC), a successful anti-poverty program, for low-income childless workers. The change would benefit an estimated 13.5 million additional Americans and cost $60 billion over 10 years.
Excluding war costs, the budget contains $549 billion for military programs, a more than 5 percent increase relative to 2014. In addition, the Department of Defense receives a separate budget for war activities, also known as “Overseas Contingency Operations” (OCO). Though the president has not yet released his proposed OCO budget for 2015, in 2014 it totaled $85 billion in additional military spending, even as troop levels in Afghanistan decline. The OCO budget is not subject to funding caps or sequestration cuts, and billions of dollars in the war budget have been widely referred to as a “slush fund.” (Read our analysis.)
For 2015 the president has dropped a proposal that was included in his fiscal 2014 budget that would measure Social Security cost-of-living adjustments (COLAs) differently. In 2014, he proposed measuring COLAs through the chained consumer price index (CPI), which is an alternate measure of inflation that would reduce Social Security benefits.
The president’s “Opportunity, Growth, and Security Initiative” includes funding for job training programs that would pair a college education with apprenticeships, as well as the president’s signature proposal to provide pre-kindergarten to every student and expand the existing Head Start program, which provides early childhood education to low-income families dedicating $66 billion over 10 years to this initiative, which would be paid for through a tobacco tax.
The president’s budget proposal would run a deficit of $561 billion in 2015. As a share of the economy, the deficit is expected to be 3.1 percent in 2015. That’s down from a high of 10 percent in 2009 following the Great Recession. Over the past 50 years, budget deficits have averaged around 2.8 percent of the economy.