Earlier yesterday, President Barack Obama proposed a $3.83 trillion budget designed to invest more money into fighting high unemployment, boosting taxes on the wealthy, and freezing spending for a wide swath of government programs. After a protracted battle on health care and a string of Democratic election defeats, the administration hopes its new budget will convince Americans the president is focused on fixing the economy.
As per Obama’s plan, this year’s deficit would amount to a record-breaking $1.56 trillion, topping last year’s $1.41 trillion gap. The deficit would remain above $1 trillion in 2011. To combat the deficit, the president proposed a three-year budget freeze on non-military and non-homeland security programs and increased taxes on energy producers and families making more than $250,000.
Obama’s budget attempts to navigate between the opposing goals of pulling the country out of a deep recession and getting control of runaway budget deficits.
White House budget director Peter Orszag stated, “It’s a question of timing. We have got to jump-start job creation now and then over time bring the deficits down. None of this is easy but it is crucially important for the American people.”
Echoing his pledge made in last week’s State of the Union address, Obama plans to work diligently on rising unemployment levels. Recognizing the effects of the worst recession since the 1930s, the budget includes a $100 billion jobs measure that gives tax breaks to boost hiring in addition to increased government spending on infrastructure and energy projects.
“Having steered the economy back from the brink of a depression, the administration is committed to moving the nation from a recession to recovery by sparking job creation to get millions of Americans back to work,” the administration said in a statement accompanying its budget.
Republicans complained about Obama’s proposed tax increases, arguing that the huge projected deficits showed he had failed to control government spending. Administration officials argued that Obama inherited a deficit that was already topping $1 trillion when he took office; further, they stated, given the severity of the downturn, the president had to spend billions of dollars stabilizing the financial system and jump-starting growth.
The new Obama budget will also include a proposal to levy a fee on the country’s largest banks to raise an estimated $90 billion to recover losses from the government’s $700 billion financial rescue fund. Those losses are expected to come from the support extended to General Motors and Chrysler and insurance giant American International Group as well as help provided to homeowners struggling to avoid foreclosures.