President Barack Obama proposed a $3.99 trillion federal budget Monday that would take more than $1 trillion from the wealthy and corporations to finance programs for the poor and middle class — a sweeping shift of wealth and a new approach to politics he hopes will define his legacy and frame the campaign for his successor.
Looking beyond the next year, he also proposed lifting budget caps negotiated earlier with Congress, boosting federal spending subject to annual appropriations by 7 percent in 2016, then increasing overall spending over the coming decade.
The budget proposal couples new proposals such as a tax on offshore corporate accounts with numerous unsuccessful spending and tax proposals recycled from past years. Together, he hopes to use them to build on his recent theme of economic populism.
“Will we accept an economy where only a few of us do spectacularly well?” Obama asked Monday. “Or are we going to build an economy where everyone who works hard has a chance to get ahead?”
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Presidential budgets don’t usually progress very far on Capitol Hill regardless of party. Obama’s plan got even less consideration than usual Monday with Republicans at the helm of both the Senate and the House of Representatives for the first time in his presidency.
Republicans panned the proposal, calling it a document to boost a Democratic Party that just suffered a series of electoral losses last year.
Senate Majority Leader Mitch McConnell, R-Ky., called Obama’s budget “another top-down, backward-looking document that caters to powerful political bosses on the left and never balances — ever.”
The liberal wing of the Democratic Party, which had criticized previous Obama’s budgets, cheered the document Monday for its focus on income equality, an issue it has been pushing presidential hopefuls to embrace.
“While the Washington chattering class focuses on what the right-wing Congress is willing to pass, the real question for President Obama is why it took so long for his administration to propose reforms with such broad, popular support,” said Charles Chamberlain, executive director of Democracy for America, a liberal advocacy group.
White House Press Secretary Josh Earnest insisted that the budget proposal is more than a political platform for Democrats, saying the White House hopes lawmakers “will seize on the ideas that are included in this budget … not for a political end but to actually get something done in Congress that would benefit middle-class families.”
Earnest insisted that the budget includes proposals Republicans could agree upon.
“The question is, will they put politics aside and actually try to work to try to find common ground with this administration to do that, or will they not, which has been consistent with their pattern in the last six years, but hope does spring eternal around here,” he said.
Obama made brief remarks on the budget from the Department of Homeland Security, where he urged Congress to fund the agency, which will run out of money at the end of the month.
Republicans refused to include the DHS in a budget deal passed late last year after Obama acted unilaterally to defer deportations for millions of people who came to the United States illegally.
Obama’s fiscal 2016 budget urges Congress to throw out spending caps adopted in 2011 and allow a 7 percent increase in spending that’s not already on autopilot, such as Social Security and Medicare.
Military spending would total $561 billion and non-defense $530 billion; increasing by $38 billion and $37 billion, respectively.
Overall, Obama’s plan would boost spending from $3.7 trillion this year to $5.8 trillion in 2024, also increasing as a share of a growing economy from 20.9 percent to 22.2 percent, higher than post-World War II averages.
His spending proposals include free community college, paid leave and Head Start early childhood programs, as well as programs to fight the Islamic State terrorist group, Russian aggression and cybervandalism.
He also wants to provide new tax breaks for the middle class, such as a tripling of the child care tax credit and creating a second-earner tax credit of up to $500 for families.
New, higher taxes
To help pay for his proposed spending and middle-class tax cuts, Obama proposes billions in taxes over the next decade.
He wants $210 billion from higher taxes on the estates and investment income of the wealthy and $110 billion from fees on finance and Wall Street. He proposed closing what the White House called the “Trust Fund Loophole,” which he said allows wealthy individuals to pass assets tax-free to heirs.
He also wants to impose a new mandatory tax on the roughly $2 trillion in offshore corporate earnings U.S. companies have amassed. The tax would help pay for an ambitious six-year, $478 billion infrastructure program focused on roads, bridges and transit systems. Companies would pay 14 percent on those existing foreign earnings and 19 percent for future earnings.
Obama said his plan would cut projected annual deficits by $1.8 trillion over 10 years, but only by relying on tax increases and legislation that are unlikely to get past Congress.
He assumes he would get $640 billion by curbing tax breaks for the wealthy, $400 billion from savings in government health programs, such as Medicare, and $160 billion from an overhaul of immigration laws.
“President Obama laid out a plan for more taxes, more spending and more of the Washington gridlock that has failed middle-class families,” said House Speaker John Boehner, R-Ohio.