Monday, February 13, 2012

Obama anchors budget on tax hikes for the rich

US President Barack Obama Monday unveils a budget packed with populist tax hikes on the rich and infrastructure and jobs spending designed to outmaneuver Republicans before he seeks reelection.

The measure, including billions of dollars in transportation and education and training projects, is expected to put the emphasis more on securing the accelerating US economic recovery than early cuts in the huge deficit.

But Obama's bid to give Americans what he calls a "fair shot" in an economy he sees as weighted towards Wall Street and the wealthy, was already drawing claims of gimmickry and political opportunism from Republicans.

"I think that there's pretty broad agreement that the time for austerity is not today," said White House Chief of Staff Jacob Lew on NBC's "Meet the Press" on Sunday, though noted Obama was calling for $4 trillion in long-term deficit cuts.

"We need to be on the path where over the next several years we bring our deficit under control.

"Right now we have a recovery that's taking route and if we were to put in austerity measures right now it would take the economy in the wrong way."

Republicans will use Obama's budget, for fiscal year 2013, as ammunition for their argument heading into November's election that Obama is a prophet of a big spending government that is not consistent with core American values.

The Obama budget is being seen on all sides as a partisan document that has little chance of being voted into law.

Democrats in the Senate say that they will not bring it up for a vote because the government is already financed through the next year on the basis of a spending agreement reached with Republicans in September.

Senate Republican minority leader Mitch McConnell wryly offered on CBS show "Face the Nation" on Sunday to bring Obama's budget up himself.

"Senate Democrats haven't passed a budget in a thousand days even though the law requires it," McConnell said.

"So I intend to offer the president's budget for him so he'll have a chance to get a vote on it."

Obama will travel to the suburbs of the crucial presidential election swing state of Virginia on Monday to unveil the budget, and highlight an eight billion dollar plan to forge partnerships between community colleges and businesses to train two million workers for high-demand industries.

The plan is a part of an effort by the White House to return jobs in the industrial and other sectors to the United States that have fled to low-wage economies in the developing world.

The proposal calls on Congress to back the Buffett rule, named after billionaire financier Warren Buffett, designed to ensure no household earning more than one million dollars a year pays less than 30 percent in taxes.

It also renews Obama's call for the George W. Bush-era tax cuts to be repealed on Americans earning more than $250,000 a year.

Obama's repeated attempts to repeal the Bush tax cuts and to bring in higher taxes for the rich have always foundered in Congress where they are opposed by Republicans.

Officials said the plan will also again call for a Financial Crisis Responsibility Fee levied on the largest banks and finance firms to compensate taxpayers for government bailouts during the financial crisis.

The proposal has in the past been blocked by Congress and appears to have little chance of being enacted now.

The plan will project a $1.33 trillion deficit for the current fiscal year, an administration official said.

Obama's last annual budget before he seeks reelection in November will also project a $901 billion deficit for fiscal year 2013 (beginning October 2012), and will frame his campaign trail message of a fair fight for all.

The spending plan will also include more than $350 billion for short-term job creation programs, senior officials said.

Obama also resubmits portions of his American Jobs Act, which has foundered in Congress, to accelerate employment creation amid signs the economy is finally speeding up. Unemployment fell to 8.3 percent in January giving Obama's reelection prospects a boost.

The president also renews his call for a boost to infrastructure spending which has again, had a tough ride in Congress.

The president wants to spend $50 billion to repair roads, rails and runways to create thousands of jobs. He also wants to spend $30 billion to modernize at least 35,000 schools and $30 billion more to help states and local governments hire teachers and first responders.

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