White House Press Secretary Josh Earnest emphasized Monday that the president’s budget aims to help the nation’s middle class.
WASHINGTON — President Barack Obama released his $3.99 trillion budget Monday, pushing for a fiscal agenda he’s dubbed “middle-class economics.”
The budget would increase taxes on wealthy Americans and corporations in order to provide middle-class tax relief and fund an ambitious $478 billion public works program. It would also avoid the deep cuts known as sequestration that occurred in 2013, allowing increases in defense spending and other discretionary programs.
The budget for the fiscal year beginning Oct. 1 is projected to run a deficit of $474 billion, which amounts to 2.5 percent of the nation’s gross domestic product—similar to estimates from the president’s past spending plans.
Running through Sept. 30, 2016, it is the last budget Obama will control while in office. Some of its provisions, including a pay raise for the military and federal workers, are likely to be met with support in Congress. But Republicans are unlikely to budge when it comes to higher taxes and a hike in discretionary spending, other than defense.
Obama’s budget would increase discretionary spending by nearly 7 percent, with $530 billion going largely toward his “middle-class economics” agenda, including nearly $300 billion in tax breaks for middle and low-income families. Obama is also pushing for more affordable public education, with provisions that would lay the groundwork for universal preschool and lower the cost of higher education.
In order to pay for these initiatives, the president would raise revenue by increasing taxes on the nation’s most prosperous people and corporations. His plan would raise the top capital gains tax rate, increase taxes on inherited wealth, levy a new financial fee on the nation’s biggest banks and close existing loopholes.
“Right now our tax code is full of loopholes for special interests like the trust fund loophole that allows the wealthiest Americans to avoid paying taxes on their unearned income. I think we should fix that and use the savings to cut taxes for middle-class families,” Obama said Monday.
Obama is also proposing a 14 percent tax on corporate earnings held overseas that currently escape taxation. The tax is predicted to raise $238 billion, which would go toward funding the budget’s $478 billion public works program.
If all individual tax provisions are enacted, the budget would raise taxes by an average of $164 per household, according to a Tax Policy Center report. But the tax increases would be largely concentrated among the top one percent of the nation’s earners, and the report says “winners would outnumber losers by more than seven to one.”
On Capitol Hill, majority Republicans are already speaking out against the proposed tax hikes.
“Today President Obama laid out a plan for more taxes, more spending, and more of the Washington gridlock that has failed middle-class families,” said House Speaker John Boehner in a statement Monday. “Like the president’s previous budgets, this plan never balances—ever.”
But Shaun Donovan, director of the Office of Management and Budget, said at a briefing Monday that “every investment” detailed in the budget is fully paid for through more efficient spending or tax revenue.
“The long-term deficit is significantly helped by this budget,” Donovan said.
Over the next ten years, nearly $6 trillion is expected to be added to the national debt. But with projected economic growth, the deficit should become more manageable, decreasing from 75 percent of GDP to 73.3 percent by 2025, according to the Office of Management and Budget.
White House Press Secretary Josh Earnest defended the budget’s provisions for non-defense discretionary spending Monday, emphasizing the need to maintain economic growth.
“One of the most important things we can do to deal with our debts and deficits is to make sure we have a strong, dynamic, growing economy,” Earnest said. “Making the kinds of investments that we know are going to be good for a dynamic, growing economy are also going to be good for deficit reduction down the line.”
