Home Tags Posts tagged with "us deficit"

us deficit

President Barack Obama has unveiled a $3.77 trillion budget plan that includes new taxes on the wealthy along with cuts to benefit programmes.

The White House is offering to cut pensions and healthcare costs, but only in return for $700 billion in new revenue.

However, Barack Obama’s plan is viewed as having no chance of being fully enacted by the deadlocked Congress.

Republican Senate leader Mitch McConnell branded the budget a “left-wing wish list”.

The Democratic president will host a dinner for senior Republicans on Wednesday evening to sell his proposals.

Conservatives have refused to agree to new revenue after passing tax rises on earnings over $400,000 in January.

Barack Obama has unveiled a $3.77 trillion budget plan that includes new taxes on the wealthy along with cuts to benefit programmes

Barack Obama has unveiled a $3.77 trillion budget plan that includes new taxes on the wealthy along with cuts to benefit programmes

Congressional Democrats, meanwhile, have balked at Barack Obama’s compromise offer to cut Social Security pension payments.

The Obama budget aims to reduce the US deficit by an additional $1.8 trillion over 10 years, bringing total potential reductions to $4.3 trillion, according to administration estimates.

Cuts in the plan include about $400 billion to government health spending, and about $130 billion from Social Security, by changing the way cost-of-living adjustments are calculated.

Elderly and disabled recipients with the lowest incomes would be shielded from the changes.

The cost-of-living adjustments would also raise $100 billion in revenue over 10 years through changes to tax brackets.

Additional cuts would include $100 billion each from military and domestic programmes as well as reductions in farm subsidies and federal employee pension programmes.

President Barack Obama proposes raising revenue by eliminating income deductions for the top 2% of earnings and includes the president’s oft-repeated Buffett Rule, requiring households with incomes of more than $1 million to pay at least 30% in taxes.

The plan also includes some new spending aimed at improving the US economy, including $50 billion in infrastructure and $1 billion for 15 manufacturing institutes across the country.

Barack Obama has previously cited infrastructure spending as the best possible investment to propel an economic recovery.

The president’s blueprint would replace automatic, across-the-board cuts – known as sequestration – to both military and domestic programmes that began on March 1st.

Those cuts took effect after Democrats and Republicans failed to agree to another plan to cut spending and reduce the US budget deficit.

Negotiations over the next US budget are expected to run into the summer, but the White House says the document released on Wednesday is not an opening offer.

“I have already met Republicans more than half way,” Barack Obama said in the White House Rose Garden.

“So in the coming days and weeks I hope that Republicans will come forward and demonstrate that they’re really as serious about the deficit and debt as they claim to be.”

But House of Representatives budget committee Chairman Paul Ryan argued that Republicans had made enough concessions.

“It goes over old ground. It takes more from families to spend more in Washington,” said the Wisconsin congressman, who was the Republican vice-presidential candidate last year.

Paul Ryan’s budget proposal, already passed in the Republican-controlled House, sets out $4.6 trillion in deficit reduction.

Most of the savings would be realized through reductions in healthcare spending and other domestic programmes, without additional tax revenue.

[youtube 1Um6j7ztAuU]

President Barack Obama has hailed a deal reached to stave off a “fiscal cliff” of drastic taxation and spending measures as “just one step in the broader effort to strengthen the economy”.

Barack Obama was speaking after the House of Representatives passed a Senate-backed bill by 257 votes to 167.

It raises taxes for the wealthy and delays spending cuts for two months.

There had been intense pressure for the vote to be passed before financial markets reopened on Wednesday.

In Tuesday night’s house vote, 172 Democrats and 85 Republicans voted in favor of the bill.

A majority of Republicans, 151 in total, voted no, along with 16 Democrats.

The bill had been passed in the Senate less than 24 hours earlier by 89 votes to eight after lengthy talks between Vice-President Joe Biden and Senate Republicans.

Barack Obama has hailed a deal reached to stave off a fiscal cliff of drastic taxation and spending measures

Barack Obama has hailed a deal reached to stave off a fiscal cliff of drastic taxation and spending measures

Asian markets have responded positively to the move, with Hong Kong’s Hang Seng index up 2.1% on Wednesday morning, while South Korea’s Kospi added 1.7% and Australia’s ASX 200 rose 1.2%.

Speaking before returning to Hawaii for his interrupted Christmas holiday, Barack Obama said that in signing the law he was fulfilling a campaign pledge.

“I will sign a law that raises taxes on the wealthiest 2% of Americans… while preventing a middle-class tax hike,” he told a White House press conference.

The US deficit was still too high, Barack Obama said: “While open to compromise on budgetary issues, he would not offer Congress spending cuts in return for lifting the government’s borrowing limit, known as the debt ceiling.”

“There is a path forward, if we focus not on politics, but on what’s right for the country,” he added.

The “fiscal cliff” measures – cutting spending and increasing taxes dramatically – came into effect automatically at midnight on Monday when George W. Bush-era tax cuts expired.

The 1st of January deadline triggered tax increases of about $536 billion and spending cuts of $109bn from domestic and military programmes.

Economists had warned that if the full effects of the fiscal cliff were allowed to take hold, the resulting reduction in consumer spending could have sparked a new recession.

The compromise deal extends the tax cuts for Americans earning under $400,000 – up from the $250,000 level Democrats had originally sought.

In addition to the income tax rates and spending cuts, the package includes:

  • Rises in inheritance taxes from 35% to 40% after the first $5 million for an individual and $10 million for a couple
  • Rises in capital taxes – affecting some investment income – of up to 20%, but less than the 39.6% that would prevail without a deal
  • One-year extension for unemployment benefits, affecting two million people
  • Five-year extension for tax credits that help poorer and middle-class families

[youtube cs5j8dGchts]