Obama’s tax hike for rich raises ire

Republican slams proposal as insult to taxpayers but president pushes growth, jobs

WASHINGTON: US President Barack Obama has 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 a US “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 longterm 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.

“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 US workforce 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-democ- racy revolutions.

The plan projects a $1.3 trillion deficit for this fiscal year and sees the shortfall dipping below the $1 trillion 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. 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,” Obama said.

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 percent 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.

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”. – SAPA-AFP