President Barack Obama probably will delay sending his fiscal 2014 budget to Congress until sometime in March, according to a defense official with knowledge of the budget process.
The spending blueprint was supposed to be delivered to lawmakers yesterday, prompting Republicans and the administration to trade criticism.
“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.
White House press secretary Jay Carney, while declining to say when the budget would be ready, accused House Republicans of putting forward “highly partisan” spending plans that have “no support among the American public.”
The defense official asked for anonymity because the administration hasn’t officially announced when the budget would be ready.
The administration has been signaling that the annual spending blueprint wouldn’t meet the deadline because of the protracted debate in Washington over taxes, spending and the deficit, especially the dispute at year’s end that focused on over tax rates. Congress ultimately approved a measure averting income-tax increases for most Americans while allowing rates to rise on taxable income of individuals up to $400,000 and of married couples of up to $450,000.
‘Forced to Delay’
Acting White House budget director Jeffrey Zients wrote in a letter last month to Representative Paul Ryan, the Wisconsin Republican who is chairman of the House Budget Committee, that because the tax 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.”
Obama is also negotiating with Congress a way to avoid the $1.2 trillion in automatic federal spending cuts scheduled to take effect March 1.
Congress created the automatic cuts in August 2011 as part of an agreement to raise the U.S. debt ceiling. In the legislation passed Jan. 1, Congress delayed the spending cuts for two months.
Stock Market
Stocks have rallied since the start of the year, with the Dow Jones Industrial Average and the Standard & Poor’s 500 Stock Index (SPX) hitting five-year highs on Feb. 1. The S&P dropped 1.2 percent to 1,495.71 at 4 p.m. yesterday 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 again seek funding for many of the proposals 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 yesterday at a conference in Washington focused on fiscal issues. Any spending cuts or revenue increases, he said, will be “basically the same” as last year’s budget blueprint.
Carried Interest
Obama reinforced that during an interview with CBS News broadcast on Feb. 3. 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. Those profits are often taxed as capital gains, which receive preferential rates under the tax code compared with levies on wages; Obama has advocated treating the profits 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,” the president said.
Taxing private equity managers’ carried interest as ordinary income would raise about $16.8 billion, according to the nonpartisan Joint Committee on Taxation.
Obama has 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.
The government is currently operating under a stopgap budget that expires March 27. If spending authority isn’t extended, government agencies face a shutdown.
Panelists at the conference on budget issues 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 congressional budget analyst, 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 into 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 spending blueprint was supposed to be delivered to lawmakers yesterday, prompting Republicans and the administration to trade criticism.
“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.
White House press secretary Jay Carney, while declining to say when the budget would be ready, accused House Republicans of putting forward “highly partisan” spending plans that have “no support among the American public.”
The defense official asked for anonymity because the administration hasn’t officially announced when the budget would be ready.
The administration has been signaling that the annual spending blueprint wouldn’t meet the deadline because of the protracted debate in Washington over taxes, spending and the deficit, especially the dispute at year’s end that focused on over tax rates. Congress ultimately approved a measure averting income-tax increases for most Americans while allowing rates to rise on taxable income of individuals up to $400,000 and of married couples of up to $450,000.
‘Forced to Delay’
Acting White House budget director Jeffrey Zients wrote in a letter last month to Representative Paul Ryan, the Wisconsin Republican who is chairman of the House Budget Committee, that because the tax 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.”
Obama is also negotiating with Congress a way to avoid the $1.2 trillion in automatic federal spending cuts scheduled to take effect March 1.
Congress created the automatic cuts in August 2011 as part of an agreement to raise the U.S. debt ceiling. In the legislation passed Jan. 1, Congress delayed the spending cuts for two months.
Stock Market
Stocks have rallied since the start of the year, with the Dow Jones Industrial Average and the Standard & Poor’s 500 Stock Index (SPX) hitting five-year highs on Feb. 1. The S&P dropped 1.2 percent to 1,495.71 at 4 p.m. yesterday 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 again seek funding for many of the proposals 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 yesterday at a conference in Washington focused on fiscal issues. Any spending cuts or revenue increases, he said, will be “basically the same” as last year’s budget blueprint.
Carried Interest
Obama reinforced that during an interview with CBS News broadcast on Feb. 3. 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. Those profits are often taxed as capital gains, which receive preferential rates under the tax code compared with levies on wages; Obama has advocated treating the profits 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,” the president said.
Taxing private equity managers’ carried interest as ordinary income would raise about $16.8 billion, according to the nonpartisan Joint Committee on Taxation.
Obama has 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.
The government is currently operating under a stopgap budget that expires March 27. If spending authority isn’t extended, government agencies face a shutdown.
Panelists at the conference on budget issues 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 congressional budget analyst, 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 into 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.”
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