Yesterday President Obama released his Fiscal Year 2015 budget proposal. Here are some key facts of the President's $3.9 trillion budget:
- The 10-year projection for the budget would bring the deficit down to a low of $413 billion in 2018 before increasing again in 2019 and beyond
- Proposes $651 billion in additional revenue, including a 30% minimum income tax on “wealthy millionaires”
- $623 billion in total defense spending
- $563 billion in total non-defense discretionary spending (ex. education, research and infrastructure)
- $2.458 trillion in non-interest mandatory spending (includes programs like Social Security and Medicare)
The budget’s emphasis on investing in infrastructure spending is welcome news for our generation. As we noted in a blog post last week, our infrastructure is in critical need of repair. According to a recent NYTimes article, we need a $3.6 trillion investment to fully repair our nation’s roads and bridges. While the President’s proposal is only 1/10 of that, it is a much-needed step in the right direction.
What’s discouraging about the proposal is that we continue to favor spending on mandatory programs over investing in our future. In 2015, discretionary spending will be less than half of mandatory spending. In fact, the budget touts cuts in discretionary spending to reduce the deficit but only achieves $80 billion in savings in mandatory spending over the next 10 years. While these proposed savings come from cuts in prescription drug costs, among other things, there are no proposals that would put entitlement programs on a sustainable path. In addition, by 2020, interest on the debt will be more than we spent on education, R&D and infrastructure in 2012.
The President was absolutely right when he said that, “Our budget is about choices”. Unfortunately, Washington is choosing to under invest in the future and is short-changing our generation in the process.
The Congressional Budget office estimates that The Highway Trust Fund could run out of money as soon as 2015. Both Republicans and Democrats agree that modernizing America’s infrastructure is important, though neither party can agree on how to pay for its enormous costs. According to the American Society of Civil Engineers, the performance of the nation’s infrastructure is a D+. They estimate that the United States will need to invest $3.6 trillion in infrastructure by 2020, yet an 18.4-cent federal gas tax and a 24.4-cent tax on diesel fuels only brings in about $35 billion per year to the Highway Trust Fund. Total public construction spending, according to Business Insider, was cut from $320 billion to $275 billion in 2012.
Today, President Obama spoke in St. Paul, Minnesota where he announced a 4 year, $302 billion proposal to reconstruct the nation’s roads and transit systems. According to the Wall Street Journal, Obama wants to pay for the plan by “closing tax loopholes and changing how businesses are taxed”; though no one knows exactly what loopholes he is referring to. House Speaker John Boehner and Obama have recently been in talks to find a solution to the funding of the infrastructure project, though they have been unable to reach an agreement. One funding idea is to raise taxes on the fuels used in cars and trucks, though neither taxes on gas nor on diesel fuels have risen in over 20 years. Boehner does not believe that Republicans will support a plan that includes raising the gas tax. Senator Rand Paul has also proposed funding the repairs of the nation’s roads by adjusting the tax code to encourage U.S. companies operating internationally to return money kept overseas, back to domestic banks.
Obama is also reminding Congress that if they do not find money to support the Highway Trust Fund, over 700,000 jobs will be at risk. Obama also announced a $600 million grant competition to encourage investments that will create jobs and restore infrastructure. The competition will allow states to apply for funding for infrastructure projects that will have “have significant impact on the nation, a metropolitan area or a region,” according to the White House.
In 2009, the American Society of Civil engineers produced a report card estimating the cost of repairing the nation’s infrastructure at $2.2 trillion. Four years later, they estimated the cost at $3.6 trillion, a $1.4 trillion increase. If we continue to neglect the nation’s infrastructure, the cost will only continue to rise for future generations.
Statement from Ryan Schoenike
Co-founder & Executive Director, The Can Kicks Back
“We applaud President Obama for laying out a path for economic growth and job creation. Millennials have been the worst hit by the recession and his forward thinking is something our generation needs. We are excited that he is ready to take steps to act where Congress will not.
However, there is still much work to be done on bringing generational balance back to the federal budget. The policies that sustain our unsustainable spending are many of the same policies that have lead to inequality. For instance the out-of-date tax code and decreased investment is discretionary programs that fund infrastructure and research. As the President mentioned these are also barriers to job creation.
We are encouraged to hear the President say that the deficit is still a policy priority, but he didn’t specify what concrete steps he would take to reform our long-term structural problems: entitlement programs and a broken tax code. Let's not let fixing our deficit and our economy fall behind election politics this year. Now is the time to work across party and generational lines to find a solution."
The Can Kicks Back is a non-partisan, millennial-driven campaign to defeat the national debt and reclaim the American Dream. Launched in November 2012, TCKB has organized 100+ chapters in 38+ states and championed the bipartisan INFORM Act. More at: www.TheCanKicksBack.org.
Contact Email: firstname.lastname@example.org
The president will address the nation tomorrow in his annual State of the Union (SOTU) speech. TCKB volunteers, Justin Scott and Ross Slutsky, wrote about what policy areas they hope the president will highlight for 2014.