US President Barack Obama (right), with US Vice-President Joseph Biden. Picture: EPA/SHAWN THEW
US President Barack Obama (right), with US Vice-President Joseph Biden. Picture: EPA/SHAWN THEW

WASHINGTON — US President Barack Obama sent his final budget request to Congress on Tuesday, a $4.1-trillion proposal for fiscal 2017 that represents his aspirations for curbing climate change, bolstering education and technology while also setting a marker in the political campaign to succeed him.

The budget unveiled Tuesday projects revenue to increase by $308bn next year and spending to increase by $196bn. Mr Obama is seeking to raise $2.6-trillion over the next decade through changes to the tax code, including revamping levies on international business income and eliminating some benefits for wealthy people.

Little of it, as the Obama administration acknowledges, will be made law anytime soon by the Republican-controlled Congress. The heads of the House and Senate budget committees announced even before the document was released that they would not give White House budget director Shaun Donovan the customary hearing to explain the president’s priorities.

"This is such a campaign document that the Republicans will almost certainly reject it out of hand because it came from Obama," said Stan Collender, a budget analyst and executive vice-president at Qorvis/MSLGroup in Washington.

As with many of his initiatives during his final year in office, Mr Obama’s budget is in part an attempt to solidify his legacy and influence the debate in the 2016 presidential campaign.

Democratic candidates Bernie Sanders and Hillary Clinton may be challenged to embrace or separate themselves from Mr Obama’s policies, and Republican candidates will seek to draw a contrast between his vision for the country and their own.

While some presidents "trim their sails" in their last budgets or make overly ambitious proposals, Donovan said Mr Obama’s budget "falls in neither of those camps" and "offers a range of proposals where there’s bipartisan support for taking action".

"The president isn’t going to shy away from proposing solutions that are both good for our economy and address major challenges we face," he said at a news briefing on Tuesday. Some proposals "may not be enacted this year but lay the groundwork for solutions in the long run."

Even before Mr Obama released his plan, Republicans including House Speaker Paul Ryan criticised it as too expensive and pledged to block Mr Obama’s agenda.

"The president’s budget was delivered to Congress today. It’s the biggest and the worst one yet," Representative Steve Scalise of Louisiana, the House Republican whip, said on Twitter.

Yet there may be opportunities for bipartisan work on a short list of items, including cancer research, addressing an epidemic of opioid abuse and overhauling criminal sentencing laws. In the wake of highly publicised breaches of public and private computer networks, Mr Obama also is asking for $19bn for cybersecurity spending, a 35% increase from the current fiscal year.

"We have software in the federal government now where the software operator doesn’t exist anymore," Mr Obama said after a meeting with national security officials on Tuesday.

Mr Obama is certain to hit firm Republican resistance in trying to cement his climate change goals in the budget by directing hundreds of billions of dollars in tax increases to fossil fuel industries, including a $10.25 a barrel tax on oil, to pay for a massive investment in clean technology research and mass transit infrastructure. He also would provide $1.3bn "to advance the goals of the Global Climate Change Initiative", which has been widely criticised by Republicans.

A two-year bipartisan budget agreement late last year set discretionary spending — the portion of the government’s ledger that is annually adjusted by Congress — at $1.07-trillion for fiscal 2017. From that amount must come money to finance functions from defence to tax collections to national parks.

Entitlement programmes such as Social Security and Medicare, the health programme for the elderly and disabled, comprise the rest of the budget, along with interest payments on the $19-trillion national debt.

The budget deal set Pentagon spending at $583bn for 2017. The Defense budget includes the beginning of a $40 billion, five-year program to improve underwater, anti-submarine defenses aimed at potential threats by Russia and China. The administration is requesting $59 billion in war funding for the Pentagon and $15 billion in war funds for the State Department and other agencies.

Mr Obama also wants $755m extra for cancer research and prevention, an effort led by Vice-President Joe Biden; $6bn to help low-income teenagers get jobs; $4bn for development of driverless cars; $4bn for computer coding classes for children; $1.1 billion to curb the US opiate-abuse epidemic and $3.4bn to bolster European defences against Russia.

Mr Obama also proposed to double spending over five years for Wall Street’s regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission. Financial institutions with more than $50bn in assets would pay a transaction fee of seven basis points on their liabilities.

To help fund the increases, Mr Obama proposes $2.6-trillion in new revenue over the next decade from a menu of tax changes. In addition to assuming $7bn in additional revenue next year from a tax on oil, the White House is counting on $36bn more from corporate taxes and $56bn more from taxes on wealthy individuals. Republican lawmakers have described Mr Obama’s proposed oil tax as dead on arrival.

The new proposals include expanding a 3.8% tax on the net investment income of high earners, to reach the active income of S-corporation shareholders, partners and LLC members and income from sales of business property.

The administration renewed last year’s proposal to reform the US international tax system, and more than doubled its projection of how much the changes would raise, to $484bn over 10 years.

The budget projects a deficit of $616bn in the current fiscal year, or 3.3% of gross domestic product (GDP), wider than the $544bn the Congressional Budget Office had projected. In fiscal 2017, the deficit is projected to be $503bn, or 2.6% of GDP, better than the $561bn the CBO expects. Over 10 years, the budget would add $6.1-trillion in deficits, compared to $9.4-trillion estimated by CBO.

The administration is relying on optimistic assumptions to underlie the figures, including enactment of Mr Obama priorities such as the Trans-Pacific Partnership trade agreement and adoption of a long-stalled rewrite of immigration law. The White House assumes the unemployment rate — at 4.9% as of January 31 — will average 4.7% this calendar year and fall to 4.5% next year.

The administration’s economic assumptions include growth accelerating to 2.6% in the current calendar year. That is faster than last year’s growth of 2.4%, which matched 2014 as the strongest performance since 2010.

The latest budget projections are also more upbeat than the median forecast of economists compiled by Bloomberg, which showed GDP will expand an average 2.4% in 2016 and 2.3% next year. For the longer term, growth will ease to 2.3% starting in 2019, staying at that pace through 2026, the budget estimates also showed.

The budget plan is for the fiscal year beginning October 1. The blueprint will probably be Mr Obama’s last because presidents rarely avail themselves of the opportunity to propose a final budget before leaving office in January. In recent years presidential budgets have been more wish lists than prescriptions for how to spend taxpayer money.

"They figure out how to make savings in areas that Congress is not going to agree to and then they talk about programs that are never going to happen," said Scott Lilly, a researcher at the Center for American Progress and a former top Democratic aide on the House Appropriations Committee.

Bloomberg