National Priorities Project Statement On President Obama’s Last Budget Proposal

President Obama’s last budget proposal for fiscal year 2017 is a mix of old and new, of longshot proposals and sure bets.

Once again, the proposal calls for more than half of discretionary spending to go to the Pentagon, war, and related spending, while calling for modest increases to address domestic needs. The budget includes proposals ranging from a doubling of clean energy research and development funding, to free community college, and quadrupling the budget for the U.S. military presence in Europe.

The proposal contains domestic initiatives ranging from modest to major that would be widely popular with the American people, but the balance of spending on the Pentagon and use of military force continues a disturbing trend.

The Big Picture: President Obama’s Final Priorities

Americans rightly expect certain things of our government: clean, safe drinking water and air, an education system that works, and a system that allows anyone to succeed. But those priorities aren’t always what we see if we look at our federal budget. Too often, we see a budget that benefits special interests at the expense of ordinary people. And more than half of discretionary spending is reserved for the Pentagon, war, and related spending. What’s more: about half of Pentagon spending has been captured by for-profit contractors. Meanwhile, proposals that would benefit Americans, like free community college, receive little or no consideration by our current Congress.

The United States has enough to go around. We can and should demand a strong EPA that would never let a crisis like Flint happen again. We should support a public education system that levels the playing field so college attendance doesn’t depend on how much money your parents make. And we should ask the wealthiest among us to contribute their fair share.

President Obama’s final budget proposal calls for increased investment in education, the fight against climate change, and new, family-friendly tax policies, all of which enjoy broad popular support. It also calls for continued windfalls for the Pentagon that will benefit for-profit contractors without adding to our security.

Here are highlights of what the final Obama budget contains:

Economic Inequality

The budget includes proposals that would take positive steps to reduce economic inequality: among them, nearly $6 billion in new funding to connect young, disconnected Americans to their first job – a tactic with proven positive outcomes for youth who receive such help.

To reach out to Americans who still live without health insurance, the budget would indefinitely expand the Affordable Care Act’s three years of full federal support for Medicaid expansion for struggling Americans to states that have so far opted out of this federal program. Nineteen states have chosen not to expand Medicaid coverage under the Affordable Care Act. The cost of the proposal would depend on how many of these states choose to extend help to struggling Americans.

The president’s clean transportation proposal, with its centerpiece programs amounting to more than $32 billion, is intended to address not only climate change, but to create hundreds of thousands of middle-class jobs in an economy that still doesn’t provide enough opportunities for good-paying work.


A strong education system is a clear prerequisite to a fair economy with equal opportunity for all. Americans consistently say that more investment in education is among their top priorities for our government.

The president’s budget proposal includes a number of targeted proposals for increasing education funding. The proposal for two free years of community college – which the current Congress failed to take up last year – reappears in this budget. President Obama also proposes to increase Pell grant funding by $2 billion, in stark contrast to congressional proposals to freeze or cut funding to the program for the lowest-income college students.

The proposal also continues support for the president’s signature Preschool for All program, a federal-state partnership that provides preschool support for the lowest income four-year olds. Preschool and early childhood education starting at birth are among the most effective means to give children from struggling families a leg up in life. The proposal also calls for modest increases in funding to other federal preschool programs, including a $434 million increase for Head Start over 2016 figures, to a total of $9.6 billion in 2017.

The proposal also recognizes the growing importance of STEM (Science, Technology, Engineering and Math) education to economic opportunity, providing $4 billion over three years in new STEM funding for K-12 education.

 Pentagon and Related Spending

The budget maintains the status quo, with more than half of discretionary funding (the funding Congress allocates each year during its budget process) reserved for the Pentagon and spending on nuclear weapons and related items. The budget provides $583 billion for the Pentagon alone in 2017, a $2 billion increase over 2016. That figure includes a $59 billion 2017 Pentagon slush fund, or Overseas Contingency Operations (OCO) funding – a fund that began as an Iraq and Afghanistan war fund and has since morphed into a Pentagon petty cash jar, and which permits the Pentagon to bust through legislated budget caps.

The Pentagon and military budget is more than ten times the budget allocated for diplomacy under the Department of State, which is $52.7 billion in 2017. This spending pattern continues to emphasize the lack of foresight and imagination in dealing with threats around the world. There are often effective alternatives to war, but we too often do not employ them. When it comes to international affairs, we allow our government to deal with problems by force after they appear, rather than by diplomacy before things get out of hand.

Threats of terrorism continue to surface as the primary rationale for this colossal Pentagon spending. Yet the president’s budget dedicates less than two percent of the Pentagon’s funding, just $7.5 billion, to fighting ISIS, making clear that even real terrorist threats are often cynically used to secure billions in unrelated Pentagon funding.

For instance, the Pentagon’s budget for fighting ISIS is roughly equivalent to what it has devoted in 2015 to developing its failed F-35 fighter jet, a plane that even if it were successful would be irrelevant to combat against ISIS’ pickup trucks. The budget provides even less for dedicated diplomatic efforts to counter ISIS, as well as provide humanitarian aid to those in the region, at $4 billion.

Meanwhile, the budget quadruples funding for the European Reassurance Initiative to $3.4 billion, recommitting the United States to military involvement in a conflict where our ability to make a positive difference is highly questionable.

Taxes and Revenue

The president’s budget proposal projects $3.6 trillion in total tax revenue in fiscal year 2017, and includes proposals that focus on raising additional revenue and increasing fairness and transparency in the tax system. Many of these would be very popular among Americans, who believe the wealthy and corporations don’t pay enough in taxes.

Past budgets from President Obama have proposed raising the top tax rate on capital gains (currently 20 percent) to equal the rate under President Reagan (28 percent) and closing certain tax loopholes on individual investments, to make the taxation of investment income more in line with the taxation of income earned by working Americans. The current capital gains tax rate is one of the biggest tax breaks for Americans in the top one percent of income.

The president would also introduce a new fee for large financial institutions – roughly 100 firms with assets of more than $50 billion that would discourage excessive risk-taking and raise $111 billion over ten years in new revenue.

The proposal would also implement the “Buffett Rule,” ensuring that the wealthiest Americans pay at least 30 percent in income taxes even after they’ve availed themselves of the numerous tax loopholes available to them.

Seven Years Down, One To Go

President Obama has less than one year left in office, and the passage of the fiscal year 2017 budget will happen in the shadow of the election of his successor. Many major budget shifts have happened under his leadership – from the American Recovery and Reinvestment Act (ARRA) to the Affordable Care Act.  Many more of his proposals, like free community college, which is popular among Americans, have fallen on deaf ears in the current Congress. But the president’s budget proposals have unfortunately not sought to alter one of the most fundamental truths of our federal budget: the emphasis on Pentagon spending at the expense of all else.