As America is scrambling for an appropriate response to the Ukrainian crisis, the Obama administration unveiled a $3.9 trillion budget proposal that sets the stage for a tough election-year debate over government’s role in promoting opportunity for all.
The plan would funnel funds into infrastructure investments like highway, railroad and bridge building, education, jobs training and other programs designed to boost the economy, handing Democrats a campaign playbook on how to foster growth and to narrow the income gap between rich and poor.
“It’s a roadmap for creating jobs with good wages and expanding opportunity for all Americans. And at a time when our deficits have been cut in half, it allows us to meet our obligations to future generations without leaving them a mountain of debt”, President Barack Obama said in Washington.
The new investments in his economic priorities were fully paid for by making spending cuts and closing tax loopholes that only benefit the top income earners, Obama added.
“Right now, our tax system provides benefits to wealthy individuals who save, even after they’ve amassed multimillion dollar retirement accounts. By closing that loophole, we can help create jobs and grow our economy, and expand opportunity without adding a dime to the deficit”, Obama said.
In addition, taxes would also be raised on tobacco products, airline passengers and managers of private investment funds.
But Obama’s budget plan is likely to have a short shelf life, as Congress has ignored those revenue proposals and many of the President’s spending ideas before.
With the entire House of Representatives and one-third of the Senate facing re-election in November, campaign-year pressures and gridlock between the Democratic-led Senate and Republican-dominated House all but ensure that few of the president’s initiatives will go far.
“After years of fiscal and economic mismanagement, the president has offered perhaps his most irresponsible budget yet,” Republican House Speaker John Boehner said in a written statement.
“In the coming weeks, Republicans will produce a responsible budget that balances, promotes opportunity, reforms our tax code, saves our critical safety net programs, and places a priority on creating jobs, not more government,” Boehner said.
The Republicans’ recipe for accelerating economic growth includes cutting taxes or overhauling the entire tax code, and they criticize higher spending as wasteful. They once again reiterated their vow to repeal the controversial health care law, should they win the elections in November.
But Obama’s budget claims to obey overall agency spending limits that were enacted in December after a bipartisan compromise was reached between the heads of the House and Senate budget committees.
The budget projects a 2015 deficit of $564 billion and a shortfall this year of $649 billion. If those come true, it would mark three straight years of annual red ink under $1 trillion, following four previous years when deficits exceeded that mark every time.
Obama’s budget starts what should be a relatively peaceful year on Washington’s fiscal front lines. That is because land mines embedded in the budgetary landscape have been defused this time around after cliffhanger, partisan showdowns in recent years.