Obama To Unveil Budget Plans: $901B Deficit and Tax Hike in Store

By: EW News Desk Team   Date: 13 February 2012

About The Author

EW News Desk Team

Latest news about the state of the world economy.

EconomyWatch, News Desk Team

 

  • Dot Div
  •      
13 February 2012

United States President Barack Obama is set to unveil his 2013 budget plans today, with predictions of a $1.3 trillion deficit in 2012 and a $901 billion deficit in 2013. In addition, the President is expected to press forward with his call for higher taxes, especially for the high-income brackets.

However, in the eyes of Republicans, Obama’s budget will be dead on arrival in Congress.  Republicans argue that his budget is designed to aid his re-election campaign this November, rather than tackle the United States’ twin debt and deficit problem.

According to Obama’s budget chief Jason Lew, the world’s largest economy is not ready for tough austerity measures. 

Related News: Obama Urges Congress to Pass US$447 Billion American Jobs Act

The White House said yesterday that the President is likely to request over $800 billion more for job creation and infrastructure projects. The overall deficit is expected to reach $1.33 trillion this year or 8.5 percent of GDP, and decline to $901 billion or 5.5 percent of GDP in 2013 – the first time since Obama took office that the shortfall falls below $1 trillion.

Eventually, the deficit is expected to fall to as low as $575 billion or 2.7 percent of GDP by 2018.

In addition, Obama is set to reiterate his call for a Buffett tax, raising taxes on those who earn more than $250,000 and for those who earn more than $1 million to pay at least 30 percent in income taxes.

Related News: Warren Buffett: I Want to Pay More Taxes!

Speaking to reporters, Lew pointed out that Obama’s 2009 budget promise to halve the deficit by 2010 was made before the full extent of economic challenges had manifest. 

Lew told ABC News, as reported by Reuters:

When we took office, the economy was falling so fast that the first thing we had to do was put a bottom in. It cost money in terms of lost revenue and slower economic growth. We’re on track now.

A White House factsheet released yesterday said:

The budget targets scarce federal resources to areas critical to growing the economy and restoring middle-class security.

However, Businessweek reports that Obama’s budget proposals are not unique. In fact, they have appeared in every budget proposal since Obama took office.

It wrote:

Much of the president’s budget plan repeats proposals that have already been rejected by Republicans, including a 10-year, $3 trillion deficit reduction package offered to Congress in September. In addition to laying out the president’s priorities, the blueprint is designed to highlight the differences between the two parties’ agendas as the November election nears.

Related Infographic: Obama's New Plan For Student Loans

Related Story: The American Economy Is In Danger of Stalling: Mohamed El-Erian

Related Story: Beware The Bounce – Why The US Economy Is Still In Trouble: Nouriel Roubini


  • Dot Div
  •      

Most Popular in US Economy

Related Links
blog comments powered by Disqus