President’s FY 2017 Budget Proposal

    View Authors February 2016

    Vying for attention with the New Hampshire primaries (and losing), on February 9, President Obama sent the final budget proposal of his presidency to Congress. The FY 2017 $4.15 trillion package was declared dead on arrival by Congressional Republicans who, in a sharp departure with years of tradition, announced that they will not hold a hearing on it.

    The Budget would increase total spending by 4.9%, mainly as a result of increases in mandatory programs, most notably Social Security and a rise in interest payments on the national debt. The proposed Defense budget is $582.7 billion, close to the FY2016 overall budget. The President’s proposal does abide by the discretionary caps set for FY 2017 by the bipartisan budget deal crafted last year. The President avoids discretionary spending limits set in the budget deal by proposing his new initiatives be classified as “mandatory spending,” which encompasses his $11 billion new homelessness initiative, along with the $1 billion to combat opioid and heroin abuse. As these initiatives would require Congressional approval, the Budget is more aspirational than it is pragmatic. On the pragmatic side, it is expected that the $19 billion request for cybersecurity funding, spread over a number of federal agencies, might gain some traction in Congress, as might the appeal to strengthen the earned income tax credit for workers not raising children. Additionally, there is some bipartisan support for dealing with the opioid crisis.

    To fund the FY 2017 Budget, the Administration has set forth proposals to raise trillions of dollars, including more than $2.6 trillion in tax revenues, by imposing a minimum and repatriation tax on foreign earnings, raising the top tax rate on capital gains, imposing a new fee on large financial firms, implementing the “Buffett Rule” (a proposal to require wealthy individuals to pay at least 30% of their income in taxes), and imposing a $10.25 per barrel tax on oil.

    Notable proposals in the FY 2017 Budget include:

    • $1.3 billion in international climate change assistance through the Global Climate Change Initiative.
    • $4 million for the Defense Department to begin planning a round of base closures (Base Realignment and Closure Commission (BRAC)) to begin in 2019.
    • $1 billion to fight opioid and heroin abuse.
    • $1 billion “cancer moonshot” initiative to fight cancer.
    • $320 billion over ten years in a multi-agency initiative to build a clean and efficient transportation system.
    • $7.7 billion for Clean Energy R&D.
    • Increasing duration of Head Start, supporting universal preschool, and providing tuition-free community colleges.
    • Expanding paid leave by dedicating $2 billion for the Paid Leave partnership to help five states launch paid family and medical leave policies.
    • $11 billion to end chronic and family homelessness.
    • $1.8 billion to fight the Zika virus.

    The release of the President’s Budget kicks off the FY 2017 budget and appropriations process, which will begin soon in the House and the Senate, and sets up a confrontation with the Republican controlled Congress. This budget outlines the President’s priorities for the last year of his presidency and, along with the concomitant response from Congress, echoes many of the themes in this Presidential election year.