President Obama released his proposed budget today, mapping out how the White House would prefer to see the federal government operate through the fall of 2013.
The key word is “prefer,” because as every news account of the budget will tell you, the plan is dead on arrival in Congress. Republicans lambasted the proposal before the details were even released, and today Representative Paul Ryan, chair of the House Budget Committee, called the Obama budget “a recipe for a debt crisis and the decline of America.” So they’re not passing it.
The White House knows this, and designed the budget essentially as a political document to contrast with Republican priorities heading into the election. The plan moves away from deficit-cutting actions—the White House budget director, Jacob Lew, said yesterday on Meet the Press that “the time for austerity is not today”—and towards measures aimed at goosing the improving, but still weak economy.
Most notably, the White House wants the very wealthy to pay for much of these stimulative measures—hiring teachers, rebuilding infrastructure and boosting manufacturing. This is an obvious nod to the increasing national focus on income inequality, not to mention the anticipation of facing a multi-millionaire ex–Wall Streeter Mitt Romney in the fall.
Here are some highlights of the budget plan, which the White House is characterizing as a “New Foundation”:
The plan calls for a total federal budget of $3.8 trillion; the projected deficit for that time period is $901 billion.
There are $1.5 trillion in new taxes, mainly from allowing the Bush tax cuts to expire for those earning over $250,000 annually but also a total tax overhaul that closes loopholes and is billed as a “fair share” restructuring.
Obama also proposes taxing dividends of the wealthiest taxpayers as ordinary income, which would be subject to a 39.6 percent rate assuming the Bush tax cuts for top earners also expire. This is commonly known as the “Buffet Rule,” and replaces the current capital gains tax rate of 15 percent. This is a departure from the White House’s earlier position on dividends, which it wanted to increase taxes on, but only to 20 percent.