Republicans reject Obama's $4 trillion budget

2015-02-03 10:13
US President Barack Obama. (Mandel Ngan, AFP)

US President Barack Obama. (Mandel Ngan, AFP)

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Washington - Republicans in control of Congress summarily rejected US President Barack Obama's $4 trillion budget on Monday, accusing him of "shamelessly pandering" to Democrats ahead of the 2016 election.

The ink was barely dry on Obama's proposal -- which would bypass mandatory spending caps and post a $474bn deficit -- before Republicans came out en masse to make clear it will not become law.

"Today President Obama laid out a plan for more taxes, more spending, and more of the Washington gridlock that has failed middle-class families," said John Boehner, the Republican Speaker of the House of Representatives.

"While the president's budget is about the past, our budget will be about the future," he said, signaling a counter-proposal to come.

While Obama's budget has no chance of being written into the statute books, it will frame arguments about equality and responsibility that are likely to dominate the 2016 race to succeed him as president.

Loaded with Democrat-championed spending and tax reforms, it could be seen as a first draft of the Democrats' election manifesto.

Using a healthier economy to pivot away from years of austerity, Obama said the time was right to invest $478bn on improving creaking infrastructure.

"We can afford to make these investments while remaining fiscally responsible," the president said. "In fact, we cannot afford -- we would be making a critical error -- if we avoided making these investments. We can't afford not to."

The budget includes sizable measures to cut costs for people paying for child care and education -- touchstone issues for Democrats.

It would triple the child care tax credit, making it eligible for families making up to $120 000, and move to make pre-kindergarten education free for all.

Obama said his plan would help "working families' paychecks go farther".

Democrats are sure to use opposition to the text to paint Republicans as anti-middle class.

Republicans have already accused Obama of instigating class warfare and fiscal impropriety.

'Shamelessly panders'

Under Obama's plan, spending would be paid for in part by an increase in capital gains tax and a one-time 14 percent tax on the estimated $2 trillion of untaxed earnings held by US firms overseas.

The Republican chairperson of the Senate finance committee, Orrin Hatch, accused Obama of going on a "government spending spree propped up by massive new tax hikes".

"This budget blueprint shamelessly panders to the Democratic base and does nothing to put our nation back on a sound fiscal footing," Hatch fumed.

But in a sign Obama was willing to take on his critics, he chose to detail his plans in a speech at the Department of Homeland Security, an agency that is currently the subject of a funding fight with Republicans.

Obama's 2016 budget assumes the world's largest economy will grow at about 3.1% this calendar year, with unemployment at 5.4% and inflation of 1.4%.

The deficit for 2016 would stand at 2.5%, comfortably below the 3% level economists deem sustainable.

The budget also includes spending to counter "Russian pressure and aggressive action" in eastern Europe.

Ukraine would receive $117m in funding, as well as a possible $1bn sovereign loan guarantee for 2016.

Moldova and Georgia would get $51m "for countering Russian pressure and destabilising activities."

There would also be funding to help defeat ISIS, around $1bn to boost governance in Central America -- the starting point for many migrants arriving in the United States -- and $14bn to support cybersecurity.

Read more on:    barack obama  |  john boehner  |  us  |  economy

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