President Obama has sent his 2016 budget to Congress which features spending at record levels of $US4 trillion. Real Clear Politics (with contributions from the Associated Press) reports.
Obama’s budget projects a deficit of $583 billion in 2015, up significantly from last year’s $485 billion imbalance. Obama’s budget plan never reaches balance over the next decade and projects the deficit would rise to $687 billion in 2025.
The administration contends that various spending cuts and tax increases would trim the deficits by $1.8 trillion over the next decade, leaving the red ink at manageable levels.
Obama calls his proposals “practical and not partisan”. There are numerous tax increases of which the main rationale is to increase taxes on the rich and the corporate sector so to give tax breaks to the middle class.
In a lengthy run-up to Monday’s budget release, the administration highlighted a number of its proposals, including $320 billion in increased taxes on the wealthy and corporations that would be used to pay for expanded middle class tax breaks.
The budget documents reveal that all the tax increases will total $2 trillion, including a number of proposals Obama has made before to limit deductions the wealthy can take to reduce their tax bill.
The Republicans predictably are not in agreement and are accusing the Obama administration of advocating tax and spend policies. The GOP have promised to introduce a balanced budget to Congress.
Congressional Republicans say the budgets they produce will achieve balance and will attack costly benefit program like Social Security, Medicare and Medicaid.
So the battle lines have been drawn between increasing the size of government when there is already $US18 trillion dollars in public debt and balancing the budget. The GOP will have to produce good ideas and workable policies as just sitting on the side-line sniping won’t help them in the battle for the White House in 2016.
I’m not convinced that increasing the size of the US federal government is the right strategy at this point in time. Surely sensible policies that reduce the flab is the way to go?
Finally the Congressional Budget Office (CBO) last week released their Budget and Economic Outlook: 2015 – 2025 which includes deficit projections based on current policies. That will be covered in a separate post.
UPDATE: The Wall Street Journal has published a series of graphics along with its own analysis of the budget. It doesn’t seem to be behind a paywall.