How Will Obama's Budget Affect You?

President Obama released his buget plan Wednesday, two months late. David Greene talks to David Wessel, economics editor of The Wall Street Journal, about the White House proposal. How important is it, really?

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DAVID GREENE, HOST:

OK. President Obama's budget is out - two months behind schedule. It is four volumes, 2,509 pages.

To tell us what pages we should be looking at closely, we turn, as we often do, to David Wessel. He's The Wall Street Journal's, economics editor and the author of a book on the budget called "Red Ink."

David, welcome back.

DAVID WESSEL: Thank you. Good to be with you.

GREENE: Well, so the White House even seems to say that this is another volley in the ongoing long fiscal battle between the president and Congress. How important is this document, really?

WESSEL: David, I think it's more important than the last few Obama budgets. The president has basically put in writing, in detail, the offer he made to House Speaker John Boehner and their unsuccessful negotiations in December. He's willing to touch Social Security, and he says that, in writing, in the budget. He's willing to touch Medicare beneficiaries, upper income beneficiaries, to be sure. And that you can see that the Democrats on the Hill, some of them are a little upset about that. They don't like, for instance, his proposal to use a different formula for adjusting Social Security to cover costs of living because it would save money. He is basically saying to Republicans, I'm willing to do something on entitlements if you're willing to do something more on taxes.

GREENE: OK. Well, if we have a Democratic president here, angering some in his own base by touching entitlements, why aren't we hearing more cheering from Republicans?

WESSEL: You didn't hear that cheering from a Republican yesterday?

GREENE: Didn't hear much cheering yesterday, no.

(LAUGHTER)

WESSEL: Well, John Boehner, the Speaker and Paul Ryan, the House Budget Committee Chairman, did, if you listen carefully, acknowledged the benefit cuts that the president put on the table. But they don't think the president is nearly aggressive enough in his deficit reduction. They want to get to a balanced budget quicker. And they really object to his proposals to raise taxes beyond the tax rate increases that Congress signed on to earlier this year. And the president, for his part, says listen, I'm only willing to do the benefit cuts if you guys are willing to do the taxes - probably cutting the deductions and credits that upper income people face - and so that's where the standoff is right now.

GREENE: So if the president is moving towards Republicans, in some sense, on entitlements, are taxes, I mean, are they still the big difference that the White House and Republicans need to work out?

WESSEL: Well, I'd say they are the biggest difference and that's no surprise. But if you look at the budgets, you can also see this huge gap in their visions for the role of government. The Republicans in the House have passed Paul Ryan's budget. He wants to spend a whole lot less money on government than President Obama thinks is wise, especially on those domestic programs for which Congress appropriates money every year - basically everything outside of benefits from pre-K education to NASA. If you look at their plans for 2017 - which is a few years off - Mr. Ryan would be spending $400 billion less, that's 10 percent less, than Mr. Obama does, so there's a big gap there as well.

GREENE: That's a lot of money. I mean the two sides are far apart.

WESSEL: Even in Washington, that's a lot of money.

GREENE: Even in Washington. I mean, given that, any chance that some version of this budget plan will pass at some point?

WESSEL: Well, any chance, yeah. There's some chance, just not a very big one.

(LAUGHTER)

GREENE: That's good.

WESSEL: Look, the president seems to be hoping that this budget will lead to spontaneous combustion in the Senate - where there are a bipartisan band of senators, nowhere near a majority, who've been talking for months about the need to find common ground on the budget so we can do the people's business, and so forth and so forth. And what he's hoping is that they will come up with something themselves that's close enough to what he could live with, that that will get things going and the leadership of Congress will run around to get ahead of the parade.

GREENE: David Wessel, always a pleasure. Thanks for being here.

WESSEL: You're welcome.

GREENE: David Wessel is economics editor of The Wall Street Journal. Now, as David just mentioned, the House Budget Chairman, Republican Paul Ryan, and President Obama have entirely different approaches when it comes to economics. Congressman Ryan, for one thing, wants the federal government to spend far less money. We spoke to Ryan this morning about the new White House budget, and here's what he said.

REPRESENTATIVE PAUL RYAN: This is a first time, in this presidency, that I've seen a chance at a bipartisan budget agreement. So I am cautiously optimistic about that.

GREENE: And you can hear much more of our conversation with Congressman Paul Ryan on the program tomorrow.

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