Countdown to the Obama Budget

The claws are already out in anticipation of President Obama’s 2014 budget proposal, which will hit the floor on Wednesday. Surprisingly, Republicans aren’t the only ones ready to sink their fangs into the proposal- Democrats are also firing at what they perceive to be a lopsided compromise.

Proposed cuts to entitlement programs like Medicare and the proverbial third rail- Social Security- have outraged the left. Says Adam Green of the Progressive Change Campaign Committee, a prominent liberal group: “Any Democrat who votes to cut Social Security shouldn’t call themselves a Democrat…It’s not in our minds an empty threat.”

One of the ways Obama proposes to make this cut is through a concept known as chained CPI. What this does is shift the government to a slower measure of inflation so the cost-of-living upticks built in to Social Security benefits lose steam. Chained CPI also raises taxes without actually raising them; by pushing people into higher tax brackets more quickly, the government will theoretically see an increase in revenue. The tax bracket is not the only tenet of the code that gets adjusted every year for inflation- phase-out levels for credits, the standard deduction, and 401(k) contribution limits would also feel the effects of the restricted adjustment.

All this boils down to a supposedly more accurate formula for calculating inflation, which, on paper, should drive the deficits down.

Across the aisle, Republicans are reeling from a proposed cap on IRA’s. Under Obama’s budget, these retirement accounts will likely be slapped with a $3 million balance limit, leaving a little more than $200,000 a year for the wealthiest retirees to live off of.

Roberton Williams of the Tax Policy Center explains: “We want to encourage people to save for retirement, but that should not be open ended.

Overall, officials say the proposed combination of spending cuts and tax increases should shrink deficits by $1.8 trillion, most of which will replace the sequestration cuts triggered by congressional inaction on March 1. Though some have hailed the president’s budget as the elusive ‘grand bargain’ of myth, a bipartisan effort to smother this baby in the crib has already begun.