Washington – President Obama’s new budget would dramatically increase spending on F-35s and other military programs that are important to Connecticut’s economy; but it would also boost funding of public works and establish a series of new programs aimed at easing the financial burden on students and working families.
Much of the new spending would be paid for by new taxes on profits U.S. companies earn overseas and an increase in capital gains taxes on the wealthy.
The proposed $4 trillion budget would increase spending on Connecticut’s defense industry and social programs and includes a new plan that would offer community college students free tuition. It would also end across-the-board spending cuts known as sequestration that have been decried by Connecticut’s defense industry and advocates of social programs alike.
Congressional Republicans, however, said Obama’s budget was dead on arrival because of its increases in spending and taxes.
“Today President Obama laid out a plan for more taxes, more spending, and more of the Washington gridlock that has failed middle-class families,” said House Speaker John Boehner, R.-Ohio, “It may be Groundhog Day, but the American people can’t afford a repeat of the same old top-down policies of the past.”
Yet Obama’s budget will set a marker for the upcoming fight with Republicans over the 2016 budget, and his plan for a “middle class economy” provides a blueprint for Democratic candidates in the 2016 election.
A move the president hoped would win bipartisan support is his six-year, $478 billion infrastructure plan that would provide upgrades for the nation’s highways, bridges and transit systems.
Half of that money would come from a one-time mandatory 14 percent tax on profits that U.S. companies have amassed overseas. Under current law, those profits only face federal taxes if they are returned, or repatriated, to the United States.
“The president’s budget made clear that future growth hinges on redeveloping our infrastructure now – our roads, bridges, trains all need renewed attention,” said Devon Puglia, a spokesman for Gov. Dannel Malloy.
The governor has made transportation improvements in the state a priority of his second term in office.
Another Connecticut Democrat was less enthusiastic.
Sen. Chris Murphy said the president’s transportation budget “is a really good proposal, but frankly it’s a partial fix for a very big problem.”
“I’m going to support the president’s idea, but we really need to see the administration putting forward ideas that are going to fully fund our nation’s transportation needs into the next decade,” Murphy said. “Connecticut’s economy is getting strangled by choked roads and rail lines, and until the federal government recognizes that we are spending twice as much money as we are bringing in for transportation purposes, we are just talking about Band-Aid fixes that continue to hold Connecticut’s economy back.”
New programs
Besides offering college students in good standing two-years of free tuition at the nation’s community colleges, Obama has proposed a new $500 tax credit for two-income families and an increase in the child-care tax credit of up to $3,000 per child under age 5.
The president’s budget also provides $6.5 million for the Department of Labor to allow a limited number of states to implement state-based automatic enrollment in IRA’s or 401(k)-type programs.
Connecticut labor unions have been lobbying for those programs, and the state last year enacted a statute mandating a feasibility study that would determine whether it could offer a retirement plan for private-sector workers who lack a private retirement plan.
Concerns about potential conflicts with the federal law that governs employee benefit plans have slowed those efforts in some states. But the Obama budget plan proposes that the Department of Labor provide waivers to allow plans for state-run IRAs and 401(k)s to move forward.
The president’s budget would also boost funding for Head Start and other early education initiatives. Heating assistance to the poor and other social service programs would also be funded at higher levels next year.
CT defense industry a big winner
The Pentagon’s $534 billion budget request would exceed the sequester’s cap by about $35 billion.
It calls for 57 additional F-35 Joint Strike Fighters, about 20 more than Congress appropriated money for this year. The engines for the F-35s are built by Pratt & Whitney in Connecticut.
The 57 new F-35s would cost about $11 billion, about $3 billion more than the Pentagon will spend on the planes this year.
The president’s budget also increases the number of helicopters the Pentagon would purchase from Sikorsky in 2016. It calls for 94 UH-60 Blackhawks, and funding for the new presidential helicopter, the King Stallion. The budget also increases funding for the new search and rescue helicopters Sikorsky is building. Money to purchase the Pentagon’s new heavy lift helicopter, Sikorsky’s CH-53K, would rise to $673 million from $560 million in 2015.
But the biggest beneficiary of the increase military spending would be the Navy, whose budget would grow by $10 billion to about $160 billion.
The Navy’s budget includes nearly $6 billion to build two additional Virginia class submarines and $1.4 billion to continue planning of a program to develop a next generation Ohio-class nuclear submarine. Groton-based Electric Boat builds the Virginia class sub and is expected to win the contract for the Oho-replacement submarine.
The budget did not include a request for money for the National Sea-Based Deterrence Fund, a fund established by Congress last year to separate from the Navy’s shipbuilding budget the funding of the Ohio-class submarines, which at about $6 billion would be the most expensive U.S. ship ever built.
But Rear Admiral William Lescher, the Navy’s top budget officer, said the Navy’s budget request includes roughly $5 billion across five years for advanced procurement for the Ohio Replacement program and $5 billion for research and development.
“They are the top programmatic priority of the department. They will get built,” Lescher said.
The admiral also said Congress’s idea of a National Sea-Based Deterrence Fund is “a great first step in bringing recognition” to the problems of funding the Ohio-replacement submarine. He said talks would continue between the Pentagon and Congress on the best way to finance the boats.
Sen. Richard Blumenthal, D-Conn., hailed the growth in procurement spending.
“The budget will allow Electric Boat, Pratt & Whitney, Sikorsky and other pillars of Connecticut’s economy to continue to provide good-paying jobs and make laudable contributions to keeping our country safe,” he said.
But Obama also renewed his call for another round of base closings. Congress has consistently refused to authorize a new Base Realignment and Closure, or BRAC, which could endanger the Naval Submarine Base, New London. Lawmakers are expected to reject the president’s call again.
But the Pentagon warned it would use its authority to shutter bases, even if it is limited on the size and scope of those operations.
“The need to reduce unneeded facilities is so critical that, in the absence of authorization of a new round of BRAC, the administration will pursue alternative options to reduce this wasteful spending,” the budget documents said.