WASHINGTON – One day after President Barack Obama unveiled his 2015 budget, Treasury Secretary Jacob Lew highlighted its strengths before the Senate Finance Committee, but also faced a sharp critique from Republicans.
“It supports the ongoing recovery and invests in long-term growth, while also building on the progress that has already been made to ensure a sustainable path for the debt and deficit,” Lew said. He acknowledged that millions are still looking for jobs in what many call a sluggish economy.
The president’s budget includes measures such as increasing the earned income tax credit to help offset income inequality, and also adjustments in the tax code to get rid of some corporate tax loopholes.
EITC is designed to help low-income working people by reducing the amount of tax owed and possibly giving refunds. According to Lew, expanding this program would “encourage more young Americans to join the workforce at the critical beginning stages of their working lives.” Obama’s EITC initiative would benefit workers without children and non-custodial parents, a demographic that did not receive this help in the past.
However, many of the measures proposed in the president’s budget have little chance of passing the Republican-controlled U.S. House. Many prominent Republicans, including Senate Minority Leader Mitch McConnell, R-Ky., and Rep. Paul Ryan, R-Wis., have said the executive budget is a disappointment.
“This budget isn’t a serious document; it’s a campaign brochure,” Ryan said in a news release Tuesday. “In divided government, we need leadership and collaboration. And in this budget, we have neither.”
At Wednesday’s hearing, ranking member Sen. Orrin Hatch, R-Utah, said the Obama budget was just a ploy to attract voters in an important election year.
“We see that the administration appears to be short on new ideas,” Hatch said.
Senators grilled Lew on the specifics of the budget, including the president’s suggested reforms for the Internal Revenue Service.
On the tax front , House Ways and Means Committee Chairman Rep. Dave Camp, R-Mich., offered last week a comprehensive tax simplification and reform plan. But Congress remains divided on the issue.
Sen. Robert Menendez, D-N.J., said Camp’s proposal to eliminate state and local deductions against federal returns would greatly hurt his constituents. While Lew agreed, he commended Camp for creating a comprehensive plan that included so many elements of reform for both individual and corporate taxpayers.
“Chairman Camp deserves a lot of credit for putting a detailed plan out there,” the secretary said.
Obama’s tax policies are among the many problems lawmakers had with the president’s budget, but some said the spending plan shows signs of positive investments for America.
“Doing the constant things you’ve mentioned in the budget in education, in infrastructure, in research – those are the ways to get the middle class moving again,” Sen. Chuck Schumer, D-N.Y., said.
Schumer was one of few senators who felt the middle class got enough attention in the budget. While Lew mentioned efforts to help low-income workers, he only briefly touched on the middle class in his testimony. Finance Chairman Ron Wyden said helping the middle class is one of his biggest priorities as chairman.
“The Obama administration’s budget includes a proposal for business tax reform,” Wyden said. “I believe a broader approach that comprehensively overhauls our broken, dysfunctional code would do more to give all Americans – especially in the middle class – the opportunity to get ahead.”
Despite efforts to minimize income inequality, Republican leaders say that Obama’s plans are only working for people in Washington, and not for the average American.
“It seems to me like the president’s just about given up on helping folks who are in the middle, folks who feel like Washington doesn’t take their concerns and anxieties into consideration anymore,” McConnell said Tuesday on the Senate floor.