US President Barack Obama unveiled a US$3.8 trillion budget on Monday packed with tax hikes on the rich and jobs programs, fleshing out a populist vision that he hopes to ride to a second term.
However, the blueprint immediately sank into the toxic mire of Washington politics, with Republicans branding it an “insult” to taxpayers, a mere “campaign document” and an example of a US “drowning in debt.”
Obama said his fiscal year 2013 budget would sustain new economic growth, create jobs, change an economic system tilted toward the wealthy and make long-term cuts to deficits now set to top US$1 trillion four years in a row.
“We have got to do everything in our power to keep this recovery on track,” Obama said, as he unveiled the document, the embodiment of his election message of restoring a “fair shot” for average Americans in a recovering economy.
“The last thing we need is for Washington to stand in the way of America’s comeback,” said Obama, in symbolic territory in swing-state Virginia, which he hopes to win in November’s election.
There is little chance of much of the document becoming law in a divided Congress in an election year. However, Obama used the budget to set political snares for Republicans he wants to brand as obstructionist foes of the middle class.
He called for more than US$600 billion in construction, research and development, training and innovation spending designed to create jobs and nurture a newly skilled US work force and 21st century infrastructure.
Obama would modernize 35,000 schools, repair roads, railways and airport runways; pour billions of dollars into education; and require the Pentagon to reconfigure missions and spend US$487 billion less than planned in 10 years.
However, the Department of Defense’s request of US$613 billion for next year still holds military spending steady after a war-torn decade.
Thrown into the complex document was a request for US$800 million to boost political and other reforms in Arab countries undergoing pro-democracy revolutions.
The plan projects a US$1.3 trillion deficit for the current fiscal year and sees the shortfall dipping below the US$1 trillion mark in the next fiscal year at US$901 billion. However, Republicans charged the deficit cutting was too slow.
“We’ve got a choice. We can settle for a country where a few people do really, really well and everybody else struggles to get by,” Obama said. “Or we can restore an economy where everybody gets a fair shot, everybody does their fair share, everybody plays by the same set of rules, from Washington to Wall Street to Main Street.”
Obama plans to pay for his proposals by repealing tax cuts for those earning more than US$250,000 a year passed by former US president George W. Bush.
He would try again to bring in a Financial Crisis Responsibility Fee on banks and finance firms to compensate taxpayers for bailouts during the financial crisis.
The proposal calls on Congress to back the Buffett Rule, named after billionaire financier Warren Buffett, designed to ensure no household earning more than US$1 million a year pays less than 30 percent in taxes.
Officials also put forward a US$206 billion proposal to tax dividends of the richest taxpayers at the rate of the top level of income tax.
Republican fiscal guru Paul Ryan, who chairs the House Budget Committee, decried “more spending, more borrowing and more debt.”