News24

Obama unveils 'fair shot' budget

2012-02-14 07:29

Washington - US President Barack Obama on Monday unveiled a $3.8 trillion budget packed with tax hikes on the rich and jobs programmes, fleshing out a populist vision that he hopes to ride to a second term.

But the blueprint immediately sunk into the toxic mire of Washington politics, with Republicans branding it an "insult" to taxpayers, a mere "campaign document" and an example of an America "drowning in debt".

Obama said his 2013 budget would sustain new economic growth, create jobs, change an economic system tilted towards the wealthy and make long-term cuts to deficits now set to top $1 trillion four years in a row.

"We have got to do everything in our power to keep this recovery on track," Obama said, as he unveiled the document, the embodiment of his election message of restoring a "fair shot" for average Americans in a recovering economy.

Divided Congress

"The last thing we need is for Washington to stand in the way of America's comeback," said Obama, in symbolic territory in swing-state Virginia, which he hopes to win in November's election.

There is little chance of much of the document becoming law in a divided Congress in an election year. But Obama used the budget to set political snares for Republicans he wants to brand as obstructionist foes of the middle class.

He called for more than $600bn in construction, research and development, training and innovation spending designed to create jobs, and nurture a newly skilled American work force and 21st century infrastructure.

Obama would modernise 35 000 schools, repair roads, railways and airport runways; pour billions of dollars into education; and require the Pentagon to reconfigure missions and spend $487bn less than planned in 10 years.

But the Defence Department's request of $613bn for 2013 still holds military spending steady after a war-torn decade.

Thrown into the complex document was a request for $800m to boost political and other reforms in Arab countries undergoing pro-democracy revolutions.

The plan projects a $1.3 trillion deficit for the current fiscal year and sees the shortfall dipping below the $1 trillion dollar mark in fiscal year 2013 at $901bn. But Republicans charged the deficit cutting was too slow.

"We've got a choice. We can settle for a country where a few people do really, really well and everybody else struggles to get by," Obama said.

"Or we can restore an economy where everybody gets a fair shot, everybody does their fair share, everybody plays by the same set of rules, from Washington to Wall Street to Main Street."

Tax cuts

Obama plans to pay for his proposals by repealing tax cuts for those earning more than $250 000 a year passed by his predecessor George W Bush.

He would try again to bring in a Financial Crisis Responsibility Fee on banks and finance firms to compensate taxpayers for bailouts during the financial crisis.

The proposal calls on Congress to back the Buffett rule, named after billionaire financier Warren Buffett, designed to ensure no household earning more than $1m a year pays less than 30% in taxes.

Officials also put forward a $206bn proposal to tax dividends of the richest taxpayers at the rate of the top level of income tax.

Obama's previous attempts to hike taxes on the wealthy have foundered on calls of "class warfare" from Republicans who warn they will slow growth and harm small businesses which are the engine of job creation.

Mitt Romney, Obama's possible Republican opponent in November, branded the document "an insult to the American taxpayer" and said it failed to secure long-term solvency for social programmes.

Republican fiscal guru Paul Ryan, who chairs the House Budget Committee, decried "more spending, more borrowing and more debt".

"Instead of an America built to last this is an America drowning in debt," he said.

Obama aides however argued that the budget got the long-term balance between spending, to secure rebounding economic growth, and austerity needed to pay down long-term deficits right.

The plan also includes cost-cutting, including $364bn in health savings, and a $226m chop for Nasa's Mars robotic exploration programme, likely axing a planned partnership with Europe.

According to the fiscal 2013 budget's assumptions, unemployment will remain above six percent until 2017.

But the jobs forecasts were finalised in November, before a sharp down tick in the unemployment rate to 8.3% last month, so officials said they could prove to be too pessimistic.

Comments
  • Wayne - 2012-02-14 07:52

    LOL! Imagine our government trying to balance(Or explain where it was spent) a $3.8 trillion budget.

      Fidel - 2012-02-14 09:36

      Well, its not that difficult for the Americans. They should look no further than the Pentagon.

      Louis - 2012-02-14 11:07

      Actually its simple. I think Obama phoned JZ and asked how to draw up a budget to screw with tax payers.

  • Angus - 2012-02-14 08:15

    THe US has a deficit of more than 1 Trillion dollars a year, and when last I checked their national debt was over 15 Trillion dollars, yet their annual budget is on 3.8 Trillion??? That means their debt is 4 times their GDP! Not even Greece's debt is anywhere near as high, yet they are probably going to default on it. This means that the world economic powers are propping up an unsustainable behemoth. Americans need to realize they are NOT the land of milk and honey anymore, as they have lived like kings for too long while while the rest of the world has paid for it. Yanks will have to accept that they will have to drop their standard of living by around 40% immediately, else the US will find itself bankrupt and FORCED to downscale their standard of living dramatically more than 40%. Sorry, but that is fact and there is nowhere for them to hide from this hard, cold truth!

      Fidel - 2012-02-14 09:43

      Their living standards are bound to fall, and have been kept artificially high by the massive amount of borrowed money. The typical American family cannot live within its means because it cannot earn enough to sustain its lifestyle. Obama wants to borrow enough to get to the next election so the US doesnt default on his watch.

      anthony.weineck - 2012-02-14 09:49

      Please don't comment if you don't understand the difference between their annual budget and their GDP. Their GDP was over 14B in 2010. Since 2010 growth has been pretty stangnant, so it's probably around the same now. Anyhow, the hard, cold truth is that a google search can keep a lot of egg from your face.

  • Marc - 2012-02-14 09:27

    Productivity has to in crease, but for that you need markets and the Chinese are flooding the markets with their cheap imitations! The only way out of this one is if they next three generations are extremely productive, creative and self - sufficient in most respects. That's how the USA did initially, so that's the only way to get back on track. As for our government trying to balance $3,8 trillion - well, that would mean balancing on monetary value in excess of 7 times or GDP! The $15 trillion deficit is somewhere along the region of 100% of GDP which is somewhere in the region of $17 trillion. Not nearly where Greece, Italy, Spain or the others are heading.

      Fidel - 2012-02-14 09:48

      The problem with increased productivity is that your brightest individuals have gone into the financial services sector, pursuing quick bucks ponzi wealth schemes. Your country used to be renowned for making things, new products and designs. Germany and other developed countries (Scandinavia, Netherlands, Switzerland) have maintained the brain input into manufacturing and design.

  • Sanjay - 2012-02-14 16:26

    CAN U View some thing THEY never TRY to TAX LARGE CORPORATIONS ,who outsource They r burning lots of middle class taxpayers money,why only middle class because rich and corporation pay no tax or minimal tax ,and they get huge bail outs DON'T worry not only manufacturing jobs but also jobs like in service sector jobs , management level jobs , financial sector , banking , insurance , legal, pharma l etc etc thousand of them r going to be outsourced overseas , (watch that YouTube link too). The dip in unemployment rate is temporarily and its cooked for election 2012 , after election it will be risen considerably in tow digits (and don t forget about the quality of jobs). http://online.wsj.com/article/BT-CO-20111221-707599.html http://www.youtube.com/watch?v=rhzMEtD349Y http://www.informationweek.com/news/199601616?pgno=2&queryText http://en.wikipedia.org/wiki/IBM_India http://modernpatriot.blogspot.com/ http://www.theburningplatform.com/?p=28624 http://www.istockanalyst.com/article/viewarticlepaged/articleid/5640311/pageid/2 Now JP Morgan chase will cut more jobs and outsource (transfer most of the jobs to overseas), most of there work force , so ready to get fired. http://www.businessweek.com/globalbiz/content/mar2009/gb2009039_431274.htm http://articles.economictimes.indiatimes.com/2011-02-14/news/28540403_1_government-bailouts-outsource-top-banks

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