Obama's $3.8 Trillion Budget: Will It Fix the Economy?

President Barack Obama, in his new $3.8 trillion budget proposal for 2013, called for taxes on the wealthiest Americans, a reduction in the national deficit and adequate funding for education.

His budget would tax long-term capital gains at a top rate of 20 percent, up from 15 percent. He has proposed a top individual income tax rate of 39.6 percent in 2013, up from 35 percent. He also wants to impose a 30 percent minimum tax for individuals with annual incomes of at least $1 million, known as the Buffett rule. This will replace the Alternative Minimum Tax, which is aimed at ensuring that the wealthy pay at least some tax but is now catching many middle class taxpayers.

The budget allows for $69.8 billion in total education spending, a 2.5 percent increase from this year. Much of this money will be focused on the K-12 system by funding numerous programs.

The proposed budget also plans to address the growing issue of student loan debt, which recently surpassed credit card debt as the highest in the country. One of the budget’s priorities is to cap the student loan interest level at 3.4 percent, instead of increasing it to 6.8 percent starting this summer.

In an effort to foster job creation in the fields of science and technology, $8 billion will be allotted to the Departments of Education and Labor to help state and community colleges expand their career centers.

It also includes an extension of long-term unemployment benefits and the current payroll tax cut. Congress needs to pass an extension of the payroll tax cut and unemployment insurance without drama and without delay and without linking it to some other ideological side issues, Obama said.

Also Obama called for more than $800 billion for job creation and infrastructure investment. Obama plans slashing $487 billion from defense spending, the first cuts since 1998.

The annual budget deficit was projected at $1.33 trillion in fiscal 2012, or 8.5 percent of gross domestic product, falling to $901 billion in 2013, or 5.5 percent of GDP.