The Looming Budget Fights

The Obama Administration budget has a number of elements that would restore fairness and progressivity to the tax code, end the creeping privatization of government functions, cut down on waste, fraud and abuse in contracting, and invest in some of the most important elements, notably education, health care and clean energy, that will drive our economic future. It is a telling quirk of the entrenched nature of Washington, however, that the most promising parts of this budget, the parts that do the most to shake up the status quo, are precisely the parts that will be fought so strenuously by those who wish to maintain that status quo.

For instance, there's the perfectly sensible alteration of the financial aid system for higher education, which would eliminate the middleman in the student loan market, reducing rates for college students while saving the government money through increasing efficiency and cutting subsidies to loan officers.

Among other changes, the Obama budget eliminates the Federal Family Education Loan Program, which excessively subsidizes banks, and moves to the U.S. Department of Education’s Direct Loan program. The Congressional Budget office projects this move to save $94 billion over nine years. The Obama budget then redirects the savings to students. The Congressional Budget Office estimates that in 2010-2011, $5 billion would be cut from subsidies to banks and lenders, and invested in students instead.

Redirecting the bank subsidies toward Pell grants would solidify the grant program as the premier source of assistance for low-income students. The Pell grant maximum would increase from $5,350 to $5,550; the estimated national average Pell grant award would increase by $121, from $3,299 to $3,423. Increasing the award will also enable an additional 130,000 more students to attend college per $100 increase in the maximum award.

However, because this system would take aim at the student loan industry that has built up in particular Democratic areas, top Democrats want to scuttle the deal.

Senate Budget Committee Chairman Kent Conrad (D-N.D.) and House Appropriations Chairman David Obey (D-Wis.) are opposed to provisions in Obama’s budget plan that would remove private banks from the federal student loan program and transfer the expected savings — $94 billion over a decade, according to the CBO— to a new program that would instead guarantee Pell Grant funding for eligible students [...]

Conrad is under some pressure from his home state to preserve a role for banks in the federally backed student loan program.

“If the president’s proposal goes through, that will deeply affect the Bank of North Dakota,” according to Julie Kubisiak, the director of student loans at the state-owned bank. She said the bank’s entire advisory board, consisting of the governor, attorney general and other officials, have written to the state’s Congressional delegation opposing the change.

That's ALL this is about. There's some lip-flap about not wanting to create a new entitlement by guaranteeing Pell Grant funding, but it's B.S. The banks want to keep their subsidies. I mean, it's not like they've created any hardship for the country lately, is it?

Then there's the battle over ending subsidies to the oil industry:

The Obama administration's push to raise taxes on the oil industry is reigniting a battle the industry fought and won last year.

Under pressure to narrow projected deficits, President Barack Obama's 2010 budget proposal calls for raising more than $31 billion over the next decade by eliminating the oil and gas industry's eligibility for various tax breaks.

The plan would slap companies with a new excise tax on production in the Gulf of Mexico worth $5.3 billion between 2010 and 2019, and repeal the industry's eligibility for a manufacturing tax credit worth $13.3 billion in that period. The industry says the final cost of Mr. Obama's proposals on petroleum production could top $400 billion, once his plan to put a price on greenhouse-gas emissions is factored in [...]

The oil industry, which in its campaign donations has long favored Republicans, is taking its case to voters. A new ad campaign by the American Petroleum Institute in about a dozen states says new taxes would "hobble our ailing economy" and "cost thousands of American jobs."

"I think we should pay our fair share of taxes, but I don't think we should look at this industry as the source of all money to pay for the renewable energy industry," said Peter Robertson, vice chairman of Chevron Corp. Mr. Robertson said Mr. Obama's tax proposals will discourage domestic oil and natural-gas production and undermine his goal of reducing U.S. dependence on foreign oil.

I know that President Obama vowed to fight the special interest he takes on in his budget. And It's good to see the grassroots advocacy groups rallying behind this, particularly against conservative Democrats who want to hide their views from their constituents. But the power is very entrenched. So this will be a very big struggle.