With the financial crisis and the so-called solutions of the stimulus bill and the housing bill, it’s easy to forget that Obama is obligated to submit a budget to Congress. He’ll provide an outline next week, with a full budget to follow in April. The Washington Post reports this morning that Obama’s budget will be “ambitious” and that he will seek to cut the deficit in half in the next four years.
I know what you’re thinking. How in the world, given the massive spending that he has already signed into law, is he going to reduce the deficit?
He’s going to stick it to the “rich.”
Obama also seeks to increase tax collections, primarily by making good on his promise to eliminate the temporary tax cuts enacted in 2001 and 2003 for wealthy taxpayers, whom Obama defined during the campaign as those earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule for the 2011 tax year, when the top tax rate would rise from 35 percent to more than 39 percent.
Obama also proposes to maintain the tax on estates worth more than $3.5 million, instead of letting it expire next year. And he proposes “a fairly aggressive effort on tax enforcement” that would target tax havens and corporate loopholes, among other provisions, the official said.
Overall, tax collections under the plan would rise from about 16 percent of the economy this year to 19 percent in 2013, while federal spending would drop from about 26 percent of the economy, another post-war high, to 22 percent.
This was an especially “rich” statement from Obama advisor, David Axelrod:
“This is consistent with what the president talked about throughout the campaign,” and “restores some balance to the tax code in a way that protects the middle class,” Axelrod said. “Most Americans will come out very well here.”
Pardon me if I don’t believe the spin that most Americans will come out very well here. The engine of our economy is the capital that “rich” people spend to hire people, grow their business and become a success. Allowing the Bush tax cuts to expire will stifle that success and will make the recession even deeper and longer than it would otherwise be, and unemployment will continue to increase. That doesn’t sound like most Americans coming out very well.
2010 is looking better and better for Republicans.