President Barack Obama has unveiled tax increases on the business and the wealthy and an end to existing spending caps in a US$4 trillion budget aimed at improving the nation’s infrastructure and boosting middle-class Americans.
The budget, much of which has been detailed over the past month, eases Washington’s emphasis on deficit-reduction measures given the strengthening economy but makes no new effort to fix the swelling costs of Social Security and Medicare, according to the Wall Street Journal.
The proposed budget calls for US$3.99 trillion in spending and US$3.53 trillion in revenue, running a US$474 billion deficit in the fiscal year beginning Oct. 1.
The 2,000-page plan calls for an end to the automatic, across-the-board spending cuts that both parties agreed to four years ago.
Lawmakers reached a bipartisan deal to ease some of the cuts two years ago but that deal expires in October.
Little in the White House budget is expected to advance in the Republican-controlled Congress but GOP desire to increase spending for the military and infrastructure keeps alive the possibility of modest deals later this year.
Obama is expected to strongly resist calls by Republicans to restore higher funding for the defense budget without equal increases in non-defense domestic spending.
“I want to work with Congress to replace mindless austerity,” Obama said Monday, adding that he hopes his budget is the beginning of negotiations with congressional Republicans. “I welcome their ideas, but their numbers have to add up.”
Several of the president’s proposals have already evoked a strong backlash on Capitol Hill.
Last week, the administration dropped a plan to tax so-called 529 savings accounts after Republicans said it amounted to a tax hike on the middle class. Top Democrats privately asked the White House to scotch the idea.
The budget includes US$561 billion in military spending, which includes funds for the West’s confrontation with Russia over its incursion in Ukraine and the US-led fight against Islamic State militants in Iraq and Syria. It also reserves US$14 billion for cybersecurity measures.
Lawmakers and Obama have also expressed hope of reaching an agreement on an overhaul of the tax code but have shown few signs of being able to forge the politically difficult compromises required.
Business groups reacted coolly to initial details of the proposal on Sunday, which would impose a one-time 14 percent tax on approximately US$2 trillion in accumulated foreign earnings. They would also face a 19 percent minimum tax on future foreign profits.
– Contact us at [email protected]