President Obama's Budget Would Tax The Rich, Cut Medicare
WASHINGTON -- The White House will propose deep cuts and modest tax hikes Monday in a budget that aims to stick to last summer's debt deal by trimming Medicare and other programs while making the well-off pay more.
Senior administration officials said the spending blueprint would lower tax rates overall. But it would end the Bush-era tax cuts for the rich enacted in 2001 and 2003. It would do that by cutting tax loopholes -- or tax expenditures, as they are called -- for high earners and corporations.
Part of that is implementing the Buffett rule, named for billionaire investor Warren Buffett, which would ensure that no one earning more than $1 million in a year pays less than 30 percent in taxes, as Buffett does now.
Overall, the plan calls for $2.50 in spending cuts for every dollar raised in taxes on people making more than $250,000 a year.
The proposal cuts the budget by $1 trillion over 10 years, and trims $4 trillion from the deficit. For the first time in five years, the deficit would fall below $1 trillion, at $901 billion in 2013, according to the proposal. The White House projects that by 2018, the deficit would drop to $575 billion, or 2.7 percent of the nation's gross domestic product.
A large chunk of the deficit reduction over the next decade -- $1.5 trillion -- would come from still-unspecified tax reforms, although the expiring Bush tax cuts would account for much.
The largest cuts would come from the defense budget and Medicare. Defense spending would be slash some $487 billion from the Department of Defense's projected budget, including savings from winding down wars in Iraq and Afghanistan.
Health programs, primarily Medicare, would be targeted for $360 billion in savings, with most expected from cuts to providers, not beneficiaries. Another $278 billion in cuts would come from farm subsidies, federal worker retirement and other programs.
The numbers in the White House blueprint would look a lot like the assessment unveiled in September.
The budget is likely to get a cold reception from Republicans in an election year, and reads itself like the political message President Obama has been delivering since his speech in Kansas late last year.
"We now face a make-or-break moment for the middle class and those trying to reach it," says the introduction to the "fact sheet" summarizing the plans. "After decades of eroding middle-class security as those at the very top saw their incomes rise as never before and after a historic recession that plunged our economy into a crisis from which we are still fighting to recover, it is time to construct an economy that is built to last," the document says, repeating the president's State of the Union theme.
Officials said the budget to be proposed on Monday was the third part of a three-act play that started with the Kansas speech and continued with the State of the Union address.
"We must transform our economy from one focused on speculating, spending, and borrowing to one constructed on the solid foundation of educating, innovating, and building," the budget introduction says. "That begins with putting the nation on a path to live within our means –- by cutting wasteful spending, asking all Americans to shoulder their fair share, and making tough choices on some things we cannot afford, while keeping the investments we need to grow the economy and create jobs."
The plan calls for more than $350 billion in short-term spending to spur job growth, including extending the payroll tax cut that Congress is battling over now, $30 billion to modernize 35,000 schools, and $30 billion to help keep and hire new teachers, police and firefighters.
There is also a commitment to building research, development and manufacturing, with $140.8 billion slated for research and development. Such spending is a sign the president is not backing off initiatives like the green-energy push that has been tarred by the failure of solar company Solyndra. The budget will recommend boosting spending for the National Science Foundation, the Department of Energy’s Office of Science, and the National Institute of Standards and Technology Laboratories.
It also calls for a six-year, $476 billion transportation reauthorization bill that the administration says would "create thousands of new jobs and modernize a critical foundation of our economic growth."
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First Posted: 02/10/2012 7:31 pm Updated: 02/10/2012 7:31 pm