Obama Budget Plan Complete Breakdown
President Obama today revealed his budget plan breakdown for the next few years with a total cost of $3.6 trillion. While pricey by any standards Obama’s promise is to reduce the deficit he inherited to $533 billion by 2013.
The largest single year deficit will be this year 2009 at a proposed $1.75 trillion. That comes to 12.3% of the U.S. gross domestic product and is a, “…record in dollar terms and is the highest as a share of GDP since World War II.”
Just like we broke down the Obama Stimulus Package we will breakdown the Obama budget plan (134 total pages) into several key areas:
- Nationalizing Health Care – Create a $634 billion health care reserve fund which is the beginning of a longer term effort to Nationalize health care.
- Higher taxes for the “wealthy” – To fund the majority of the budget deficit the “wealthy”, or those individuals making $200,000+ (couples making $250,000+) will be hit with a slew of tax increases, limits on deductions, amongst other policy changes. This include business tax increases as well.
- The War in Iraq – Over $200 Billion will be spent in 2009 and 2010 on the war to begin removing troops from Iraq and re-stationing the majority of them in Afghanistan.
- More funding for banks – Another $250 Billion is proposed to be dedicated to financing US banks to help combat the financial crisis. This is after the already $700 billion dedicated through TARP (Troubled Asset Relief Program).
- Capping Greenhouse gas emissions – What may become a large source of income for the US is to force polluters to start paying for their destruction. Estimated revenue of $646 Billion through 2019.
To breakdown these topics further we have excerpts from today’s WSJ, CNN Money, and MarketWatch.
1. Nationalized Healthcare
(From CNN Money): Create a $634 billion health care reserve fund: The purpose of the fund would be “dedicated [to] financing reforms to our health care system,” according to the budget outline. Among the fund’s goals would be to aim for universality of coverage and reduce the growth in insurance premiums.
It would be paid for in two ways. The first, expected to raise $318 billion over 10 years, would limit how much of a deduction high-income taxpayers may take. Instead of reducing their tax liability by their top income tax rate, they wouldn’t be allowed to reduce their bill by any more than 28%. So for every $100 in deductions, they would reduce their tax liability by $28.
The second way Obama proposes to pay for the fund is to achieve health care savings by, among other things, reducing payments to private insurance companies offering Medicare and reducing prescription drug prices. The administration estimates these efforts could save $316 billion over 10 years.
The budget outline also notes the $634 billion fund is “not sufficient to fully fund comprehensive reform” but is a first step in the process.
Great image from the WSJ breaking down the Health Care proposal below:
2. Taxing the Wealthy
(From the WSJ): As expected, tax increases will rise for singles earning $200,000 and couples earning $250,000, beginning in 2011 — for a total windfall of $656 billion over 10 years. Income tax hikes would raise $339 billion alone. Limits on personal exemptions and itemized deductions would bring in another $180 billion. Higher capital gains rates would bring in $118 billion. The estate tax, scheduled to be repealed next year, would instead be preserved forever, with the value of estates over $3.5 million — $7 million for couples — taxed at 45%.
Alongside taxing the wealthy there will be big savings from program cuts *sarcasm added* which MarketWatch highlights, “…$20 million from Agriculture Department programs, almost $200 million from stopping payments to clean up coal mines and “tens of millions of dollars” by cutting what Obama called an ineffective mentoring program for students.” Tens of millions to pay off trillions?
3. The War in Iraq
(From the WSJ): The Defense Department would see a $20.4 billion boost in 2010, a 4% increase from this year, slowing its growth from the Bush years but securing personnel increases for the Army and Marine Corps. Mr. Obama will request an additional $75.5 billion for the wars in Iraq and Afghanistan for the rest of 2009 and another $130 billion for 2010, as he withdraws most combat troops from Iraq over 19 months but sends many of them to Afghanistan.
4. More bank funding
(From CNN Money): Obama’s outline also reveals how much more money he and his economic team are setting aside to stabilize the financial system. Their estimate: $250 billion. That would be on top of the $700 billion already authorized by Congress under the Troubled Asset Relief Program.
5. Greenhouse Gas Emissions
(From the WSJ): In one of the budget’s most ambitious proposals, the president plans to cap the emissions of greenhouse gases, forcing polluters to purchase permits for emissions that would be slowly brought down to 14% below 2005 levels by 2020 and 83% below 2005 levels by 2050. The sale of those permits, beginning in 2012, would reap $646 billion through 2019. Of those revenues, $525.7 billion would be devoted to extending Mr. Obama’s signature “Making Work Pay” $800 tax credit for working couples. Another $120 billion would go to clean energy technology.
Alongside the above budget plan breakdown emphasis can be added on Alternative Energy and Education as other areas of key interest of Obama’s budget plan. The popular Pell Grants for example will be indexed to inflation with reward maximums being increased to $5,500 over future school years.
The WSJ provides a fantastic chart to simplify the budget plan. Simply click the chart below to be taken to WSJ for a complete interactive breakdown of funding.
Other Recent Posts on Obama and the US Government:
- Obama Stimulus Package Breakdown.
- 21 Reasons the Recession is Nearing its End
- Proposed Aggregator Bank Flaws revealed.
- Treasury Secretary Geithner’s new plan not received well.
- Obama signs the Stimulus Package ($787 Billion) into law.
Sources:
Obama Delivers $3.6 Trillion Budget Blueprint
Jonathan Weisman
WSJ, February 26th, 2009, 1:11 P.M. ET
Obama unveils far-reaching $3.6 trillion 2010 budget
Robert Schroeder
MarketWatch, February 26th, 2009
Obama pulls back the curtain: 10-year budget plan
Jeanne Sahadi, CNNMoney.com senior writer
Yahoo Finance, February 26th, 2009, 12:27 pm EST
This is anti-business, anti-personal liberty to the productive and a shameless degradation of our children’s future fro short term political gain. Lenin would love this!