The president’s budget proposal is not likely to pass Congress “as is,” but it does present his point of view and probably a rough idea of what we can expect. That expectation is wholly consistent with what we have been telling our clients and listeners – plan on higher taxes in the years to come.
Among the specifics included are:
Achieving a $1.8 trillion deficit reduction by raising $600 billion in new revenue by:
- Reducing a high income earner’s current 39.6% benefit on itemized deductions to 28%
- Implementing a “Buffett Rule” that imposes a minimum tax rate of 30% on those earning over $1 million a year
The other $1.2 trillion of the $1.8 trillion in proposed deficit reduction will come from:
- $200 billion: defense and nondefense discretionary
- $400 billion: Medicare, federal health programs, mainly impacting hospitals and pharmaceuticals
- $600 billion: programs including agricultural subsidies and unemployment insurance
President Obama wants to boost the economy, raise taxes, and trim the deficit by $1.8 trillion over the next 10 years (the plan would replace the automatic sequestration currently in place).
That is an impossible balancing act -- stimulus, austerity, and transfer of wealth from high-income individuals and corporations. Nevertheless, it may lead to a compromise that will surely be better than what we have now.