February 2, 2015
President Obama is sending Congress an ambitious budget plan Monday that includes a half-trillion-dollar public works program and an array of tax increases meant to fund a host of other agenda items — in what Republicans are ripping as a tax-and-spend document that does little to restrain the soaring $18 trillion debt.
The president’s $4 trillion budget hinges on what Obama calls “middle-class economics,” seeking tax breaks for many Americans while imposing increases on top earners, corporations and particularly the financial sector.
But House Ways and Means Committee Chairman Paul Ryan has accused the president of exploiting “envy economics.”
And the president’s budget shows the red ink flowing indefinitely. Administration officials say their goal is to hold the deficit to a small percentage of the total U.S. economy — but not necessarily to eliminate it.
The fiscal 2016 budget proposal would leave a deficit of $474 billion. Obama’s budget plan never reaches balance over the next decade and projects the deficit would rise to $687 billion in 2025.
“It seems to be more of the same policies that have resulted in the lowest, slowest economic recovery out of an economic downturn in the history of the country — more taxes, more spending, more borrowing,” House Budget Committee Chairman Tom Price, R-Ga., told Fox News.
As part of his budget, Obama is proposing a six-year, $478 billion public-works program for highway, bridge and transit upgrades, with half of it to be financed with a one-time, 14 percent tax on U.S. companies’ overseas profits.
The tax would be due immediately. Under current law, those profits are subject only to federal taxes if they are returned, or repatriated, to the U.S., where they face a top rate of 35 percent. Many companies avoid U.S. taxes on those earnings by simply leaving them overseas.
The tax is part of a broader administration plan to cut corporate tax breaks and increase taxes on the country’s highest wage-earners to pay for projects to help the middle class. Members of the GOP-controlled Congress and other fiscal conservatives have dismissed the overall plan since elements of it were announced several weeks ago.
The administration contends that various spending cuts and tax increases would trim the deficits by about $1.8 trillion over the next decade, leaving the red ink at manageable levels.
Congressional Republicans say the budgets they produce will achieve balance and will attack costly benefit program like Social Security, Medicare and Medicaid.
Interviewed on NBC’s “Meet the Press,” Ryan said, “This top down redistribution doesn’t work.”
Obama, interviewed by NBC before the start of Sunday’s Super Bowl game, said he believed there were areas where he can work with Republicans, who for the first time in his presidency control both houses of Congress.
“My job is not to trim my sails and not tell the American people what we should be doing, pretending somehow we don’t need better roads, that we don’t need more affordable college,” Obama said.
Obama’s budget emphasizes the same themes as his State of the Union address last month, when he challenged Congress to work with him on narrowing the income gap between the very wealthy and everyone else.
Higher taxes on top earners and on fees paid by the largest financial institutions would help raise $320 billion over 10 years which Obama would use to provide low- and middle-class tax breaks.
His proposals: a credit of up to $500 for two-income families, a boost in the child care tax credit to up to $3,000 per child under age 5, and overhauling breaks that help pay for college.
Obama also is calling for a $60 billion program for free community college for an estimated 9 million students if all states participate. It also proposes expanding child care to more than 1.1 million additional children under the age of 4 by 2025 and seeks to implement universal pre-school.
Obama’s budget also proposes easing painful, automatic “sequester” cuts to the Pentagon and domestic agencies with a 7 percent increase in annual appropriations, providing an additional $74 billion in 2016, divided between the military and domestic programs.
Many Republicans support the extra military spending but oppose increased domestic spending.
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