Today is the President’s budget day but with the Patriots huge win over the defending Super Bowl champions, the Seattle Seahawks, no one is paying attention. (In full disclosure: I am a big Patriots fan).
President Obama is scheduled to deliver his second-to-last budget in office. Since January, he’s leaked different policy ideas, including two years of free community college, expanding tax credits for childcare and spouses who work, and infrastructure spending. He plans to pay for these big-ticket items by soaking the wealthy with new taxes. It’s the new Middle-class Economics and for all taxpayers – especially wealth generators – it’s going to hurt.
As we know, the President has proposed to expand access to two years of community college to nine million “responsible” students across the country. This proposal could cost $60 billion over a decade. We can expect to see full details in today’s budget.
Middle-class economics also prescribes money for childcare (a new tax cut of up to $3,000 per child), per year; seven days of paid sick leave; and closing the pay gap, which the Democrats tend to exaggerate for political purposes.
Our crumbling roads and bridges would get a makeover if the President has his say as well. His budget will include $478 billion to improve creaking infrastructure. According to the White House, this money is supposed to modernize our infrastructure and create good jobs here. The one-third increase in infrastructure spending would be paid for, in part, by a one-time 14-percent tax on foreign earnings, and a 19-percent tax on future corporate profits overseas.
Speaking of paying for all of this, the President’s budget has a hefty price tag at $4 trillion dollars. It’s expected to produce a $474 billion deficit for 2016 and rise to $639 billion in 2025. Apparently, it magically is designed to keep annual deficits stable in relation to our country’s economic output. So while the deficit will be 2.5 percent of GDP next year, although the dollar amount will rise by 2025, the percent of GDP will be about the same. If you’re skeptical, so am I.
With the memory of budget deficits receding, the President plans to turn up the “rich vs. poor” rhetoric and finance his expansionist plans through new taxes on higher-income earners.
As we reported, he plans to raise $320 billion over the next decade to pay for some tax cuts. The President’s tax plan would eliminate the ''trust-fund loophole'' which shields inherited assets from taxation each year, increase the top capital-gains tax rate to 28 percent from 23.8 percent for couples with incomes above $500,000 annually, and asses a new fee on banks with assets over $50 billion.
Politico sees this as a very specific strategy:
Which does the public care about more: Cutting spending? Or “middle-class economics”?
Those are the battle lines for the next year, starting this week. In the budget he’s releasing Monday, President Barack Obama is betting that Americans prefer “middle-class economics” to reducing the federal deficit. Since short-term deficits are down, the logic goes, most Americans will be less worried about them — and more interested in middle-class tax breaks and more spending on new benefits like free community college.
He’s also sure that Americans hate the automatic budget cuts known as the “sequester” as much as he does, and will rally to his call to get rid of it — especially if they can have the middle-class goodies instead.
Republicans in Congress, however, are betting that most of the public is still more worried about long-term spending problems — especially since the deficits will start rising again in a few years — and that they can beat back all the catchy middle-class economics talk with tried-and-true promises to cut spending and fight tax hikes.
The President is looking out over the next two years and thinking about his legacy. We’ve seen him apply his pen to healthcare, immigration, the minimum wage, and environmental policy.
Now, he’s tackling these smaller-ticket items that he probably thinks will cement him in the mind of Americans as the president for the Middle Class. Never mind that his policies have the direct and indirect consequences of harming those who are middle-and low –earners as well as the wealthy. All the while, he’s heating up the populist rhetoric that will be helpful to rally support for progressives in future elections.
We expect no surprises just mite taxpayer pain and will report more once the budget is released.