Obama said to seek 7% budget boost, sets up congress fight

[WASHINGTON] President Barack Obama will ask Congress for as much as US$68 billion more than current budget limits in fiscal 2016, according to two people familiar with the administration's proposal.

The request sets up a fight with the Republican-led House and Senate over whether to reverse part of the spending limits that the US Congress and the White House agreed to in fiscal deals earlier this decade.

The new spending would mean as much as US$34 billion each for the national security and domestic sides of what will be a budget of almost US$4 trillion. It will be detailed in the budget proposal Obama will send to Congress on Feb. 2.

That amounts to an almost 7 per cent increase over discretionary-spending levels prescribed by automatic cuts known as sequestration voted into law in 2011, according to the people, who asked for anonymity because the budget plan hasn't been released.

It's a bold move at a time when many Republicans in Congress say they are eager to make deeper cuts in spending and are invigorated by a November election in which they expanded their House majority and gained control of the Senate.

"I think there might some bipartisan opposition" to the new spending, said Don Stewart, a spokesman for Senate Majority Leader Mitch McConnell, a Kentucky Republican. Senate and House Republicans are meeting at a policy retreat today in Hershey, Pennsylvania.

It's not yet clear whether Mr Obama will seek to offset the spending increases with revenue or cuts elsewhere in the budget. The additional funding would put the bottom line for discretionary spending at about US$1.08 trillion for fiscal 2016.

Mr Obama is asking for the extra spending at the same time he has been highlighting an improving government balance sheet.

The budget deficit has been shrinking in recent years as the economy strengthens, hiring picks up and company profits improve. The shortfall in the fiscal year that ended Sept 30 was US$483 billion, or 2.8 per cent of gross domestic product, down from a record US$1.42 trillion in 2009.

Third-ranking House Republican Steve Scalise of Louisiana said Thursday in Hershey, "We need to work on getting our budget back to balance and start living within our means." A 7 per cent increase in spending, he said, "doesn't do that." House Speaker John Boehner's spokesman, Cory Fritz, said in an e-mailed statement, "President Obama just can't wait to try and spend more money Americans don't have." Discretionary Funding Discretionary funds are the portion of the budget that the president and Congress agree to each year, as opposed to mandatory spending that generally funds long-term programs, such as Medicare and Social Security. Money for those programs is distributed based on the eligibility of participants rather than limited to an annually negotiated sum.

The 2016 fiscal year begins on Oct 1.

Melanie Roussell Newman, a spokeswoman for the Office of Management and Budget, declined to comment.

The White House also will ask Congress to cut a separate Overseas Contingency Operations account that has funded US military activities in Iraq and Afghanistan. The 20 per cent reduction sought in that account, to US$51 billion from US$64 billion, comes in conjunction with the drawdown of US forces in Afghanistan.

That could put additional pressure on the Pentagon - and its allies in Congress - to keep pushing for an easing of sequestration. Democrats have long maintained that defense- minded Republicans will ultimately join them in increasing funding for national security and domestic programs.

"You've got a battle in the Republican ranks," Maryland Representative Chris Van Hollen, the top Democrat on the House Budget Committee, said, noting that Republican senators including Republican Senators John McCain of Arizona and Lindsey Graham of South Carolina favor increased defense spending and more libertarian lawmakers in the House and Senate are loathe to lift current spending limits.

Democrats want the lure of more Pentagon money to boost spending for education, scientific research and other domestic programs.

"We believe we should work together to lift the caps on both," Mr Van Hollen said.

BLOOMBERG