President Barack Obama sent a $3.8 trillion budget proposal to Congress yesterday for 2013. Though it is doubtful that Congress will pass this budget, it illustrates many of the elements that will frame the coming political contests between Democrats and Republicans in this election year. Below are many of the highlights from the proposal.
Obama’s budget forecasts a deficit for fiscal year 2012 that will top $1.3 trillion, before falling in 2013 to $901 billion, or 5.5% of gross domestic product. He predicts that if his budget is enacted it would generate $4 trillion in deficit savings over the next decade.
To achieve this goal, the budget would raise $1.5 trillion in new taxes over the next ten years, mainly by letting Bush-era tax cuts expire at the end of this year on families making more than $250,000 a year. The President would also raise money by imposing a rule named after investor Warren Buffett that would seek to ensure that wealthy people making more than $1 million a year pay at least 30% of their incomes in taxes. In addition, the budget proposes to limit the deductions wealthy taxpayers can claim and certain tax breaks for corporations, including oil and gas companies.
“We can’t just cut our way into growth,” Obama said yesterday. “We can cut back on the things that we don’t need, but we also have to make sure that everyone is paying their fair share for the things that we do need.”
When it comes to economic and job growth, Obama is seeking more than $350 billion in the short term, including $50 billion in upfront investments for transportation projects, $30 billion to modernize at least 35,000 schools and $30 billion to help states hire teachers, police and first responders.
As for the military, the Pentagon’s overall spending would be reduced in an effort to save $260 billion over the next five years, in part by slashing the number of troops, ending the wars in Iraq and Afghanistan and making limited reductions in weapons systems.
The budget also addresses education spending and seeks $850 million for the administration’s “Race to the Top” competition to provide grants to schools undertaking approved reforms and $8 billion to support efforts by community colleges to train 2 million workers in high-growth industries.
As for healthcare, the biggest driver of future US deficits, Obama’s budget seeks to slow the growth in Medicare and Medicaid by about $360 billion over the next decade.
Unsurprisingly, the Republicans were harshly critical of Obama’s plan. Senator Jeff Sessions of Alabama, the top Republican on the Senate Budget Committee, said, “The budget is utterly irresponsible,” and Republican House Budget Committee Chairman Paul Ryan, said, “It seems like the president has decided again to campaign instead of govern and that he’s just going to duck this country’s fiscal problems.”
What do you think? Do you support President Obama’s budget proposal? Join the discussion atTheStockEnthusiast.com after the break!
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