More budget details revealed
Obama spending plan has $478 billion for public works
WASHINGTON — The $4 trillion budget that President Barack Obama sends Congress today proposes higher taxes on top income-earning Americans and corporations, and an ambitious $478 billion public works program for highway, bridge and transit upgrades.
The proposals, many recycled from past Obama budgets, already are generating fierce objections from Republicans, who control both chambers of Congress for the first time in his presidency. They will move ahead on their own, mindful they eventually must strike a deal with Obama, whose signature is needed for the budget to become law.
The spending blueprint for the 2016 budget year that begins Oct. 1 emphasizes the same themes as Obama’s State of the Union address last month, when he challenged Congress to work with him on narrowing the income gap between the very wealthy and everyone else.
Obama, in an NBC interview before the Super Bowl, disputed a suggestion that he and the Republican-led Congress are so far apart that his budget proposals have no chance of winning approval.
“I think Republicans believe that we should be building our infrastructure,” Obama said. “The question is how do we pay for it? That’s a negotiation we should have.”
The president said he was putting forward good proposals but was willing to listen to ideas presented by Republicans.
“My job is not to trim my sails and not tell the American people what we should be doing, pretending somehow we don’t need better roads, that we don’t need more affordable college,” Obama said.
In documents obtained by
Obama’s six-year, $478 billion public works program would provide upgrades for the nation’s highways, bridges and transit systems, in an effort to tap into bipartisan support for spending on badly needed repairs.
The Associated Press, Obama lays out the country’s first $4 trillion budget — $3.999 trillion before rounding — with proposed spending supported by $3.5 trillion in revenue.
For the budget year that ended Sept. 30, the actual deficit was $483 billion. That was a marked improvement from the $1 trillion-plus deficits during Obama’s first years in office, when the country was struggling to emerge from a deep recession.
The budget office sees the deficits rising for the rest of the decade, once again topping $1 trillion by 2025 as spending surges in the government’s big benefit programs with the retirement of millions of baby boomers. Obama’s budget projects a $687 billion deficit in 2025, though its forecast of economic growth would keep deficits at a manageable percentage of the gross domestic product.
Obama’s budget does not make major changes in politically popular programs such as Social Security and Medicare. Republicans are promising action in their budget plans.
“We’re six years into the Obama economic policies, and he’s proposing more of the same, more tax increases that kill investment and jobs, and policies which are hardly aspirational,” Republican Rep. Paul Ryan of Wisconsin, chairman of the House Ways and Means Committee, said in an interview.
But Ryan also told NBC’s Meet the Press that he was willing “to work with this administration to see if we can find common ground on certain aspects of tax reform.”
Obama’s six-year, $478 billion public works program would provide upgrades for the nation’s highways, bridges and transit systems, in an effort to tap into bipartisan support for spending on badly needed repairs.
Half of that money would come from a one-time mandatory tax on profits that U.S. companies have amassed overseas, according to White House officials who spoke on condition of anonymity before the budget was released.
The tax on accumulated foreign profits would be set at 14 percent and due immediately. Under current law, those profits face federal taxes only if they are returned, or repatriated, to the U.S., where they face a top rate of 35 percent. Many companies avoid U.S. taxes on those earnings by leaving them overseas.
The administration wants to overhaul corporate taxes by ending certain tax breaks and lowering rates, a challenging task that Obama and Republican leaders insist they are ready to tackle.
Higher taxes on the wealthy and on fees paid by the largest financial institutions would help raise $320 billion for lowand middle-income tax credits. Obama also is calling for a $60 billion program for free community college for qualified students and an $80 billion child care initiative.
The administration’s budget last year proposed a smaller four-year bridge and highway fund, relying on taxing accumulated foreign earnings, but without specifying a formula.
This time, the budget will call for the one-time 14 percent mandatory tax on the up to $2 trillion in estimated U.S. corporate earnings that have accumulated overseas. That would generate about $238 billion, by White House calculations. The remaining $240 billion would come from the federal Highway Trust Fund, which is financed with a gasoline tax.
Obama’s proposal is an opening offer aimed at what some see as modestly hopeful prospects for a compromise with Republicans in Congress on corporate tax changes.
Motivating lawmakers is the fact that the federal highway fund is now operating under a stopgap measure that expires May 31. Republicans and Democrats are eager for a solution that would avoid a shutdown and disruption in infrastructure projects in progress nationwide.
The White House proposal would extend the life of the highway trust fund by six years.
The current 35 percent top tax rate for corporations in the United States, the highest among major economies, serves as a disincentive for U.S. companies to reinvest their for- eign earnings back in the United States.
Under Obama’s plan, the top corporate tax rate for company profits earned in the U.S. would drop to 28 percent. While past foreign profits would be taxed immediately at the 14 percent rate, going forward, new foreign profits would be taxed immediately at 19 percent, with companies getting a credit for foreign taxes paid.
Ryan, the House’s lead tax policy writer, embraced that idea as long as it was part of “properly constructed tax reform.”
Obama’s budget will propose easing painful, automatic cuts to the Pentagon and domestic agencies with a 7 percent increase in annual appropriations. For 2016, he wants a $38 billion increase for the Pentagon; many Republicans support that.
But his demand for a nearly equal amount for domestic programs sets up a showdown that may not be resolved until late in the year.
Another centerpiece of the president’s tax proposal is an increase in the capital gains rate on couples making more than $500,000 per year. The rate would climb from 23.8 percent to 28 percent.
Obama wants to require estates to pay capital gains taxes on securities at the time they are inherited. He also is trying to impose a 0.07 percent fee on the roughly 100 U.S. financial companies with assets of more than $50 billion.
Obama would take the $320 billion that those tax increases would generate over 10 years and funnel them into middle-class tax breaks. His ideas: a credit of up to $500 for two-income families, a boost in the child care tax credit to up to $3,000 per child under age 5, and overhauling breaks that help pay for college.
The budget will lay out in detail the cost of his proposal to make two years of community college free. In the first fiscal year, which will begin in October, it would be a modest $41 million, but the cost would climb to $951 million by 2017, and $2.4 billion by 2018 as more students took advantage of the program, according to a congressional budget aide briefed on the numbers.
Ryan said Republicans had a more modest higher education agenda. They could work with the Obama administration on efforts to make university costs more transparent and the payoffs of each college degree more clear.
“The idea of opening a marketplace where people see what things cost and see the results” is a good one, Ryan said.
Republicans are expected to propose their budget in the spring.
They will put forward ideas for controlling the main drivers of the deficit — Social Security and health care programs that are expanding with an aging population — and will propose a budget that balances, Ryan said. But, he indicated, they are not likely to force a showdown on entitlements.
The debate will focus instead on policies that can lift middle-class incomes, which have stagnated with a globalized labor force, technology and mechanization.
“The president will make the point that we need strong job growth,” said Rep. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee. “We need to invest in our economic future, and that means education, science, research and infrastructure.
“I actually see us having a great debate in the next few years,” he added. Information for this article was contributed by Jim Kuhnhenn, Martin Crutsinger and Andrew Taylor of The Associated Press; by Lisa Mascaro and Kathleen Hennessey of Tribune News Service; and by Jonathan Weisman of The
NewYorkTimes.