Benefits Insights, Spring 2016
The White House submitted its $4.1 trillion budget for FY 2017 on February 9, 2016. Despite being the last budget request submitted by the Obama Administration prior to the end of its term, the proposal addresses several long-term priorities as well as items from the Bipartisan Budget Act of 2015.
The budget focuses on several key initiatives such as addressing climate change, finding new cures for serious illnesses, promoting all levels of education from preschool to training programs to higher education, improving areas of national security to include fighting ISIL and promoting greater cybersecurity.
The request is a 5% increase over the FY 2016 budget. The majority of the increase is for mandatory spending such as Social Security, Medicare, and Medicaid. A smaller percentage of the increase is for defense and non-defense discretionary programs, which is where the majority of federal contract spending is derived. The non-defense request for FY 2017 is nearly flat compared to FY 2016, and defense is increasing slightly to $608 Billion.
While spending is increasing 5%, revenues are increasing 9% to $3.6 trillion in FY 2017. The revenue increase is largely due to jumps in individual and corporate income taxes and increases in Social Security and Medicare payroll taxes.
Since the Bipartisan Budget Act of 2015 set new discretionary spending limits through 2017, there were few surprises. Next year’s budget, however, will need to address new priorities from a new president.