With a blend of tax hikes and spending increases, President Barack Obama’s $4 trillion budget spells out a policy agenda that will distinguish him from the Republicans who now control Congress. It also will contain opening bids for some long-shot compromises.
Republicans have already dismissed much of Obama’s initiatives – including his plans for more taxes on the rich to pay for free community college and to expand child care.
But Obama is releasing his budget Monday after a year of relative peace in Washington’s budget battles as the federal deficit drops and as his popularity numbers inch higher. Although Republicans will march ahead on their own, they ultimately must come to terms with the Democratic president, who wields the power of the veto.
Obama is proposing to ease automatic cuts to the Pentagon and domestic agencies with a 7 percent increase in annual appropriations. He wants a $38 billion increase for the Pentagon that Republicans probably will want to match. But his demand for a nearly equal amount for domestic programs sets up a showdown that may not be resolved for months.
First on the agenda is the need to finalize the current-year budget for the Homeland Security Department. It’s tied up over a Republican demand to reverse Obama’s executive action that extended work permits and temporary deportation relief to some 4 million people who are in the U.S. illegally. Funding for the department runs out Feb. 27. Obama plans a budget speech at the department Monday.
Obama challenged the GOP in his radio and Internet address Saturday.
“If they have ideas that will help middle-class families feel some economic security, I’m all in to work with them (Republican lawmakers). But I will keep doing everything I can to help more working families make ends meet and get ahead,” he said. “Because we want everyone to contribute to America’s success.”
Republicans insisted they are the champions of the middle class.
“Expanding opportunity, protecting middle-class savings, holding government accountable: These are your priorities, which means they are Republicans’ priorities,” Kansas Representative Lynn Jenkins said.
A centerpiece of the president’s tax proposal is an increase in the capital gains rate on couples making more than $500,000 per year. The rate would climb from 23.8 percent to 28 percent. Obama wants to require estates to pay capital gains taxes on securities at the time they are inherited. He also is trying to impose a 0.07 percent fee on the roughly 100 U.S. financial companies with assets of more than $50 billion.
Obama would take the $320 billion that those tax increases would generate over 10 years and funnel them into middle-class tax breaks, a plan to pay for two years of community college for about 9 million students, and a proposal to increase child care for low- and middle-income parents.
Altogether, the White House calculates that Obama’s tax increases and spending cuts would cut the deficit by about $1.8 trillion over the next decade, according to people briefed on the basics of the plan.
For 2016, the Obama budget promises a $474 billion deficit, about equal to this year. The deficit would remain under $500 billion through 2018, but would rise to $687 billion by 2025. (AP)
