via a special arrangement with Informa Economics, Inc.
Obama's budget proposals signal CHANGE if
Congress goes along
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or retransmission is prohibited under U.S. copyright laws.
President Barack Obama on Thursday outlined
his $3.6 trillion Fiscal Year 2010 budget request for federal spending
stretching out over a decade. Citing a “one in a generation”
opportunity to chart and dramatically alter the nation’s path, Obama
released a summary of plans for federal agencies stretching out over a
decade. His full request is expected in April.
The following are key details -- I previously wrote a
separate column on ag-related spending/cuts.
-- Federal spending: Federal
spending for FY 2010, the combined total of annual appropriated monies
and mandatory spending for items like Social Security and Medicare, would
total about $3.552 trillion, while receipts will total $2.381 trillion
in 2010, leaving a deficit of $1.171 trillion. That would be below the
projected record $1.752 trillion deficit for FY 2009. Federal outlays
in FY09 will be 27.7 percent of GDP, from 21 percent of GDP in 2008, and
20 percent in 2007. In FY 2010, estimated government spending will be
24.1 percent of GDP.
-- Budget deficit: The
White House projects a deficit of $1.75 trillion for this year, or 12.3
percent of the gross domestic product (GDP), a level not seen since 1942.
While the deficit is projected to decline to $533 billion by 2013, some
observers label that optimistic due to optimistic White House assumptions
for a strong economic rebound. But Christina Romer, chairwoman of Obama's
Council of Economic Advisers, said, “We had a lot of inside information.
We knew what the plan is we are trying to put in place” to lift
the economy. The budget forecast assumes that the US GDP will decline
about 1.2 percent this year, and a growth forecast 3.2 percent for 2010.
-- Placeholder in place for more bank
losses: The FY 2010 budget includes a $250 billion placeholder
for government losses associated with additional financial rescue efforts.
Those losses would come from the possible use of an additional $750 billion
and are based on estimates that the government would get back two-thirds
of its investment. OMB Director Peter Orszag said the administration currently
has no plans to ask Congress or the money. Congress authorized a $700
billion rescue fund last year.
-- Financial regulation: The
Securities and Exchange Commission (SEC) would get a 13 percent funding
boost, bring its FY 2010 budget to more than $1 billion.
-- Income tax hikes: To
pay for a lot of the additional spending in the budget, Obama income-tax
rates would rise for singles earning $200,000, and couples earning $250,000,
beginning in 2011, for a total increase in revenue of $656 billion over
10 years. Income tax hikes would generate $339 billion alone. It would
raise the top two income-tax rates to 36 percent and 39.6 percent from
33 percent and 35 percent, respectively, starting in 2011. Estimates of
households paying the top rates range up to 2.5 million. Limits on personal
exemptions and itemized deductions would bring in another $180 billion.
Higher capital gains taxes would bring in $118 billion.
-- Estate tax: The estate
tax, slated to be repealed next year (for only one year), would be preserved,
with the value of estates over $3.5 million ($7 million for couples) taxed
at 45 percent.
-- Corporate taxes: Corporations
doing business overseas could no longer defer US taxation on profits parked
abroad, a development Obama has sated encourages the movement of jobs
away from the United States. This would generate $210 billion over the
-- Hedge fund and private equity managers
whose income stems from taking a percentage of their clients'
investment gains would have to pay income-tax rates for that compensation
as high as 39.6 percent after 2010, considerably above the current 15
percent capital gains rate they currently pay. This would generate $24
billion in revenue.
-- National health care: Much
($634 billion) of the additional revenue from tax increases would be to
pay for expansion of the nation's health care system, with the aim of
providing coverage to the more than 45 million uninsured. Many observers
put the cost at $1 trillion or more over ten years.
-- Climate change/cap-and-trade: Obama
wants to cap emissions of greenhouse gases, forcing polluters to purchase
permits for emissions that would be phased down to 14 percent below 2005
levels by 2020 and 83 percent below 2005 levels by 2050. Importantly,
the sale of those permits, beginning in 2012, would garner $645 billion
through 2019. Of those revenues, almost $526 billion would be devoted
to Obama's “Making Work Pay” $800 tax credit for working couples,
helping to defray increased energy costs that utilities and others would
likely pass on to consumers. About $120 billion of the spending would
be on low-carbon technologies over ten years. The cap-and-trade system
is projected to raise about $80 billion annually starting in 2012, and
assumes a starting price of $20 per ton for carbon emissions, and amount
sure to rise.
-- Energy: Another $120
billion would go to clean-energy technology, including a new electricity
grid. There would be new levies on oil and gas companies, including an
excise tax on Gulf of Mexico production and fees for drilling on federal
lands, beginning in 2011 in an effort to close what Obama's aides said
were loopholes that have provided companies “excessive royalty relief.”
-- Huge spending increase for EPA: Obama
wants a massive 34 percent increase for EPA from the projected $7.8 billion
the “independent” agency will get for FY 2009. The $10.5 billion
funding request for FY 2010 includes a $19 million boost for work on the
inventory of greenhouse gas emissions, to prepare for climate change legislation
ahead. The EPA may try to regulate emissions administratively. Showing
he's from Illinois Obama allocates $475 million for a new, interagency
program on the environmental restoration of the Great Lakes. EPA currently
has around 17,000 employees. They will get more if the funding increase
-- Pharmaceuticals: New
rules would allow consumers to buy cheaper medicines from abroad, and
a faster pathway to approval for generic drugs.
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retransmission is prohibited under U.S. copyright laws.