President Barack Obama probably won’t send his fiscal 2014 budget to Congress until sometime in March, according to a defense official with knowledge of the budget process.
The delay of the president’s spending blueprint, which the law says is supposed to be delivered to lawmakers Monday, drew immediate criticism from Republicans, who have been battling Obama over tax and spending issues.
“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. “It’s long past time for the president to do his job.”
The defense official asked for anonymity because the administration hasn’t officially announced when the budget would be ready. White House press secretary Jay Carney declined to comment on the date, telling reporters traveling with the president to an event in Minnesota, “I don’t have an update on the president’s budget.”
The administration has been signaling that the annual spending plan wouldn’t meet the deadline because of the protracted debate over taxes, spending and the deficit. Acting White House budget director Jeffrey Zients wrote in a letter to U.S. Representative Paul Ryan last month that because a 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.”
Stocks have rallied since the start of the year, with the Dow Jones Industrial Average and the Standard & Poor’s 500 Stock Index hitting five-year highs on Feb. 1. The S&P dropped 1.2 percent to 1,495.71 Monday in New York, and the Dow retreated 129.71 points to 13,880.08 after climbing above 14,000 last week for the first time since 2007. Ten-year U.S. Treasury yields lost six basis points to 1.96 percent.
Even if the budget is late by a month or more, it’s unlikely to change the political debate over fiscal issues. Obama has said he’s planning to repeat many of the proposals that were contained in last year’s $3.8 trillion budget, which was never fully 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 Monday at a conference in Washington. 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 Sunday. 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. It’s often taxed as capital gains, which receive preferential rates under the tax code compared with levies on wages, and Obama has advocated treating that 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,” he said.
Obama has also proposed limits on the value of deductions, capped at 28 percent for households earning more than $250,000, and has proposed 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 budget issues conference 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 budget analyst in Congress, 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 maybe 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.”
The fiscal 2014 budget, when it arrives, “will be pretty much what’s he’s done before but give away as little as possible upfront,” Collender said.
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