Obama unveils big spending budget
President Barack Obama called on Monday for aggressive spending to boost growth and for higher taxes on the rich, laying out an election-year vision for America in a budget that drew heavy fire from Republicans for failing to curb huge deficits.Updated: Feb 13, 2012 23:21 IST
President Barack Obama called on Monday for aggressive spending to boost growth and for higher taxes on the rich, laying out an election-year vision for America in a budget that drew heavy fire from Republicans for failing to curb huge deficits.
Obama's 2013 spending proposal is expected to go nowhere in a divided Congress and is widely seen as more of a campaign document that frames his economic pitch to voters and seeks to shift the focus from deficits to economic growth.
It fleshed out a major theme of his re-election campaign - "economic fairness." He wants wealthier Americans to bear more of the
burden of slashing a federal deficit that was a trillion plus dollars for a fourth year in a row.
The budget proposal is a "reflection of shared responsibilities," the Democratic president said at a campaign-style event in Annandale, Virginia, referring to his call for a minimum 30% tax on millionaires.
In one of his best opportunities before the Nov. 6 election to convince voters that he deserves a second term, Obama called for more than $800 billion for job creation and infrastructure investment, including billions of dollars for roads, railways and schools.
He also set aside money to hire more teachers, police and firefighters and invest in manufacturing, while extending tax breaks to spur hiring.
"At a time when our economy is growing and creating jobs at a faster clip, we've got to do everything in our power to keep this recovery on track," Obama said.
He casts his Republican rivals as the party for the rich while Republicans want to paint Obama as a tax-and-spend liberal. The budget projects deficits remaining high this year and next before starting to decline, meaning more borrowing that will add well over $7 trillion to the national debt over the next decade.
DEAD ON ARRIVAL
Congress is free to ignore the plan and Republicans, who control the US House of Representatives, have made clear that it will be dead on arrival as their party prepares an election battle over taxes, spending and the size of the government.
"Obama's budget is an insult to the American taxpayer," said Mitt Romney, frontrunner for the Republican nomination to face Obama in November.
Many of the ideas have been outlined in Obama's' previous budgets or laid out by him in September. These include tax hikes to raise $1.5 trillion over 10 years and spending cuts that together would lower the deficit by $4 trillion in that period.
Obama urged tax breaks for families earning over $250,000 a year be allowed to expire at the end of 2012, while raising the tax on dividends to the level of income tax rates, instead of the capital gains rate that is currently 15%.
The annual budget deficit was projected at $1.33 trillion in fiscal 2012, or 8.5% of gross domestic product, falling to $901 billion in 2013, or 5.5% of GDP.
"This proposal isn't really a budget at all. It's a campaign document," said Mitch McConnell, the top Republican in the Senate. "It's bad for job creation, bad for seniors, and that it will make the economy worse."
Obama pledged in 2009 to halve the deficit by 2013. But the White House argues the depth of the recession he faced when he took office demanded emergency action, and it was more important to protect growth than impose austerity measures.
The budget projects that deficits will decline as a share of the economy to 2.8% of GDP in 2018. That takes the deficit beneath the vital 3 percent threshold, which credit rating agencies and investors view as consistent with stabilizing the growth in national debt.
First Published: Feb 13, 2012 23:19 IST