The America I know is generous and compassionate; a land of opportunity and optimism. We take responsibility for ourselves and each other; for the country we want and the future we share. We are the nation that built a railroad across a continent and brought light to communities shrouded in darkness. We sent a generation to college on the GI bill and saved millions of seniors from poverty with Social Security and Medicare. We have led the world in scientific research and technological breakthroughs that have transformed millions of lives.
This is who we are. This is the America I know. We don’t have to choose between a future of spiraling debt and one where we forfeit investments in our people and our country. To meet our fiscal challenge, we will need to make reforms. We will all need to make sacrifices. But we do not have to sacrifice the America we believe in. And as long as I’m President, we won’t. --
President Obama The President laid out a vision, Congress will determine how it's paid for. Some of the commentary on the speech focuses on the balance between spending cuts and increasing revenues (3:1 or 2:1, respectively). Part of the reason for the imbalance is the President isn't calling for an end to the tax cuts for the middle class. If the President did away with the middle-class tax cuts, revenues would increase another $2 trillion over the next decade.
Ezra Klein:
Does the Obama budget raise taxes? Or cut them?By This should be an easy question to answer. The president’s
proposal says it includes “three dollars of spending cuts and interest savings for every one dollar from tax reform.” That’d make the ratio 3:1. But as Ethan Pollack, a senior fellow at the Economic Policy Institute and a former staffer on the Fiscal Commission, points out, another calculation — and one that’s just as valid — suggests it’s 2:1. Or maybe 1:1. Or maybe, in case you’re not sufficiently confused, there’s actually a big tax cut in the plan, and no new revenues whatsoever.
<...>
So let’s go back to that 3:1 calculation. What they’re implying here is that the proposal is $3 in spending cuts for every $1 in tax increases. That is to say, it relies much more heavily on spending cuts than on tax increases. But if you look closely, they’re including a trillion in reduced interest payments in the spending cuts category. There’s no real reason, however, that reduced interest payments should count as spending cuts. After all, some of those reduced interest payments are coming because we’ve raised taxes. If you put the interest payments in their own bucket — something the White House does often when it encourages people to look at the “primary deficit,” which excludes interest payments — the ratio of actual spending cuts to tax increases is more like 2:1. And then, if you add in the expiration of the Bush tax cuts for the wealthy, it’s more like 1:1.
But that gives the White House too much credit. As the law is written, it’s not just the tax cuts for income over $250,000 that expire in 2012. It’s all the Bush tax cuts, which amount to about $4 trillion over the next 10 years, of which the cuts for the rich are less than $1 trillion. So the Obama administration is saying it’s going to extend about 80 percent of the Bush tax cuts and let 20 percent of them expire. Even if you add in the trillion dollars they’re looking to raise by cleaning out the tax code, that means that means that the sum total of their policy — both what’s included in their budget proposal and what’s hidden behind it — amounts to large tax cut when compared to current law. Their policy only amounts to a tax increase if you ignore the massive tax cut they’re building into its background assumptions.
The plan could be made more balanced by also addressing specifics in reforming the tax code and strengthening Social Security, e.g., increasing the income cap for Social Security and ensuring that corporate loopholes are closed and these entities actually pay taxes.
Here is what the President proposed, from the WH
Fact Sheet:
<...>
6. Tax Reform
The President is calling on Congress to undertake comprehensive tax reform that produces a system which is fairer, has fewer loopholes, less complexity, and is not rigged in favor of those who can afford lawyers and accountants to game it.
He believes we cannot afford to make our deficit problem worse by extending the Bush tax cuts for the wealthiest Americans.
He also supports efforts to build on the Fiscal Commission’s goal of reducing tax expenditures so that there is enough savings to both lower rates and lower the deficit. Reform should be designed to ask more of those who can afford it while protecting the middle class and promoting economic growth.
In addition, as he explained in the State of the Union, the President is continuing his effort to reform our outdated corporate tax code to enhance our economic competitiveness and encourage investment in the United States. By eliminating loopholes, reducing distortions and leveling the playing field in our corporate tax code, we can use the savings to lower the corporate tax rate for the first time in 25 years without adding to the deficit.
7. Social Security
The President does not believe that Social Security is a driver of our near-term deficit problems or is currently in crisis. But he supports bipartisan efforts to strengthen Social Security for the long haul, because its long-term challenges are better addressed sooner than later to ensure that it remains the rock-solid benefit for older Americans that it has been for past generations. The President in the State of the Union laid out his principles for Social Security reform which he believes should form the basis for bipartisan negotiations that could proceed in parallel to deficit negotiations:
- Strengthen retirement security for the low-income and vulnerable; maintain robust disability and survivors’ benefits.
- No privatization or weakening of the Social Security system; reform must strengthen Social Security and restore long-term solvency.
- No current beneficiary should see the basic benefit reduced; nor will we accept an approach that slashes benefits for future generations.
President Obama made a number of specific proposals in his 2012 budget.
<...>
The president, in a $3.7 trillion budget plan released yesterday in Washington, revived dozens of proposals that Congress has rejected, including
$129 billion in higher taxes on the overseas profits of U.S. companies. He also proposed changing the
tax treatment of oil, gas and coal companies, which would raise about $46 billion.
<...>
The proposal also would
bring back pre-2001 tax rates on income and capital gains for individuals earning more than $200,000 annually and married couples making more than $250,000. The
estate tax would return to 2009 levels with a $3.5 million per-person exemption and a 45 percent top rate. Under a law Obama signed in December, lower rates expire at the end of 2012.
<...>
The budget plan would
limit itemized deductions for top earners to 28 percent, curbing the value of tax breaks for charitable contributions, home mortgage interest and state and local taxes. That proposal has been included in every budget of Obama’s presidency and was rejected as a revenue-raising provision to fund his overhaul of the health system last year.
linkThe budget also includes a
$30 billion tax on the largest financial institutions and
infrastructure, job creation and other investments.
The 2011 budget proposed
$90 billion.
The ball is in Congress' court, and the Progressive Caucus is already pushing to define the direction Congress must take.
By Raul M. Grijalva, Mike Honda and Lawrence Mishel, Special to CNN
<...>
The "
People's Budget" would create jobs and invest in long-term growth, investing $1.7 trillion in job creation, infrastructure, education and scientific research and development over a decade. The most effective path for deficit reduction is to dramatically reduce unemployment and get Americans working in good jobs, earning more and paying taxes.
This budget does that. The People's Budget also strengthens Social Security by raising the taxable maximum to include 90% of economy-wide earnings and eliminating employer-paid caps on their high-income employees.
Together these policies would maintain the solvency of Social Security, without any reduction in benefits, at least 30 years beyond current projections. It also secures access to affordable health care by adding a competitive public option and negotiating drug prices with big pharmaceutical companies resulting savings of nearly $250 billion over a decade.
The budget would responsibly end the wars in Iraq and Afghanistan and impose sensible budget constraints on the Defense Department. The budget makes targeted public investments, but cuts overall spending by $1.7 trillion over a decade.
It requires corporations to pay their fair share by eliminating taxpayer subsidies to oil and gas companies and closing international tax loopholes that deprive the United States of jobs, investment and revenue. It taxes exotic and risky Wall Street financial instruments to curb speculation and recovers the costs of the financial crisis.
The budget restores fairness to the tax code by asking more from those who can afford to pay more. Instead of cutting taxes for the wealthiest Americans, the budget raises taxes on those who have seen most of the income gains over the last decade by adding new tax rates for millionaires and billionaires. The budget taxes investment income as wage income, ending an unfair tax system that taxes income from wealth at lower rates than the wages of teachers and nurses.
moreThe People's Budget is in line with the President's vision, and it adjusts the ratio of cuts to revenues.
Now, how much are progressives, in the House and Senate, going to push this?
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
