Obama eyes tax hikes, spending cuts to curb deficit

By Agence France-Presse
Monday, February 14, 2011 8:09 EDT
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WASHINGTON (AFP) – US President Barack Obama will unveil his 2012 budget later on Monday, proposing a raft of spending cuts and tax hikes aimed at curbing a record budget deficit.

Facing a projected $1.65 trillion budget shortfall this year — an all-time high — Obama plans to trim $90 billion from government spending in 2012, while dramatically boosting tax revenues, senior administration officials said.

Addressing widespread public fear that the government is living beyond its means, the administration will vow to cut the deficit by more than one trillion dollars over the next ten years.

The plan includes $400 billion worth of cuts to non-essential programs over the next decade and $78 billion worth of cuts to planned defense spending over five years.

Energy subsidies for the poor would be slashed and public workers’ pay frozen, while a range of programs from community service funding to housing assistance and infrastructure development would lose hundreds of millions of dollars.

It is, according to one senior official, “a responsible plan which shows that we can live within our means and invest in the future. It cuts spending and crucially important it cuts the deficit.”

The plan hopes to cut the deficit from whopping 10.9 percent of GDP expected this fiscal year to seven percent in 2012 and down to 4.6 percent in 2013 — fulfilling Obama’s promise to half the deficit by the end of his first term in January 2013.

But despite the cost-cutting rhetoric, many of the deficit gains would come from revenue increases, including higher taxes.

Tax cuts for the highest earners would be allowed to expire, while those in the highest bracket would also face a 30 percent drop in allowable tax deductions.

Oil, gas and coal companies would lose 12 tax breaks, raising $46 billion for the government in the next decade.

But the administration is also betting that better economic growth will help swell the government’s tax coffers.

The administration forecasts that next year receipts will increase by more than 20 percent, or $453 billion compared with this year.

“I don’t think that we should overlook the importance of the economy growing,” one official said. “Because there is more income, there is more income subject to taxation and your revenue goes up.”

But in an effort to cut costs without choking the economy’s recovery or competitiveness, the plan also shifts billions in spending toward the high-tech and green energy sectors and toward help for those out of work.

States would be given more flexibility to pay for unemployment benefits, while $18 billion would be available to improve high speed Internet access, and $8 billion for high-speed railways in the fiscal year starting October 1.

At 2,448 pages and a weight of 10 pounds (4.5 kilograms) the 2012 budget contains something for most members of Congress — who have to approve it — but plenty more that will be loathed.

Ahead of the budget’s publication, Republicans have been outdoing themselves in the promotion of ever-deeper spending cuts and criticizing Obama for not doing enough.

Republicans argue spending cuts will help boost growth, while the Obama administration argues cuts are needed, but should be carefully measured for fear of derailing the recovery.

Bringing the two sides together is likely to be a long process that takes up most of the year before the required congressional approval of the budget.

“It looks like the debt’s going to continue rising under this budget,” House Budget Committee Chairman Paul Ryan told “Fox News Sunday” after Republicans promised $100 billion in cuts to popular programs for the remainder of the current fiscal year.

“Presidents are elected to lead, not to punt. And this president has been punting.”

Fears are growing that the inability of the United States to get its budget under control could eventually lead to a debt crisis and a possible default that would plunge the globe into crisis.

Agence France-Presse
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  • Anonymous

    The “Two Santa Claus” theory has been bought:

    How the Republicans Bankrupted America: The Two Santa Claus Theory


    Two Santa Clauses or How The Republican Party Has Conned America for Thirty Years


  • Guest

    In a logical and honest government, it could be EASILY seen that the NUMBER ONE place to make a dent in the deficit would be ending the two wars of aggression. BUT, of course, behind that NOT happening are the profits for the Military Industrial Complex.

    Let the body bags stack up, let the debt be cut on the backs of the poor, but do not touch the corporate War Machine!!!
    What a fucking country….

  • http://pulse.yahoo.com/_3T7VECLRJCVK2Z327KVJILQH24 cameron

    “energy subsidies to the poor…..”????? Yeah that will work out well for him. As energy costs go through the roof, and people are poorer now more than ever.

  • Anonymous

    The Catch-22: risk unemployment at 35% by pulling out of these wars from the private contractors and the soldiers…..There is always Katrina to fix, fast train tracks, water mains, etc.

  • Guest

    “There is always Katrina to fix, fast train tracks, water mains, etc.”

    Exactly. It would be kind of back to the Roosevelt plan for jobs that actually helped everyone in the end. However, Denny, wouldn’t that be a form of SOCIALISM? The greater good? Heck forbid! (-:)

  • Anonymous

    He was eager to keep Bush’s tax cuts for the very wealthiest in place. Now he’s doing it by letting little children freeze and elders starve to death while raising taxes on the rest of us. Nice work there, Bush III

  • Wyrdless

    Their plan is to go from borrowing $6,400 per man woman and baby in America to borrowing only $2000 a person by 2017.

    No plan on actually paying down the enormous debt, just a reduction in the rate of increase.

  • Anonymous

    How is the High speed Internet going to be a boon to me especially as I now sit bundled at my computer using dial-Up (ever since I canned Comcast for canning Olbermann) freezing my aging senior behind off & apparently now looking forward to an even colder future winter thanks to the pending cuts in the HEAT Program? Let the poor take the bullet for the excesses of the wealthy & our young men die in their (oil induced) wars……….

  • http://profiles.yahoo.com/u/EHJJXSTSSOCXLTSQBUVIDYUF7M Dave

    He’s proposing to cut practically nothing from the military. What the hell is wrong with this guy. Every day he sells out more and more. Americans are only going to get change by doing what Egypt did. Why are groups such a Move On and Code Pink not starting to organize the protest we need.

    What should happen is what MLK was planning to do right before he got assassinated. That obviously scared the crap out of the upper-class.

    Bring the poor and unemployed to DC

  • frigar

    How come nobody talks about cutting the huge “Farm Welfare” programs?

  • Anonymous

    The plan includes $400 billion worth of cuts to non-essential programs over the next decade and $78 billion worth of cuts to planned defense spending over five years.

    See a problem there..at all? If were not going to take an honest look at defense, then why even bother? Cut heat from the poor or close over sea bases? That’s not that hard of a choice for me. Hell, you can keep the bases just have the countries they’re in offset the cost. If South Korea wants a base that’s fine, you pay for it Korea.

  • Anonymous

    the only thing i don’t get is… if you cut $$ from the poor, they will get poorer and in the end cost more because like it or not we are all brothers and sisters… the other thing is, all the money is generated from a computer, we should print some more while we have the chance and up grade the infrastructure… if the world goes off the dollar… the crap will hit the fan more than we think.. or so it seems to me…

  • Anonymous

    Especially, for Monsanto.

  • Anonymous

    I watched a show where there are only 2 companies in New York that build those large wooden tanks that set up on the top of buildings so a pump does not have to work constantly to get water to the supply lines. Scary work, but these kind of “green” items need to be in place. Where are the FDR types? And, it took bush ten years to screw this up, I guess we need patience, because it will take a lot of time to fix this insanity.

  • Anonymous

    Start with the military waste. Especially, the chemical and bacteria warfare. Then ask Wall street to give back all our money. Close the Fed, and create National banks. Finally, tax the damn rich.

    Obama must be that “Little Brown One” that Poppy Bu$h talked about.

  • Anonymous

    Our military spending is over 1 TRILLION PER YEAR and he wants to cut $15.6 billion of that. That’s less than 2 percent.

    Sorry, not good enough. We need to cut our empire building/war mongering/murder-torture industry welfare spending by about 85% and then what’s left will be about equal to our legitimate defense needs.

  • Anonymous

    I’ll tell the Rethugs what socialism is. Its the Fed. Its all the corporate welfare. Its all of those sports stadiums that were built by the tax payers. Its paying the CIA to sell drugs for the Bu$h Crime Family. Its sticking us with a broken constitution by taking away our civil liberties with the Patriot act for spy contracts.
    Its using our military to steal oil for the Bu$h Crime Family. Its using our military to guard BP from us. Its paying off foreign dictators with our tax dollars. Its that 9 billion dollars that went missing during the Iraq war. ITS HEALTH CARE AND A PENSION FOR CONGRESS!!!

    I’m sure there is more…..

  • Jaimie11

    “Energy subsidies for the poor would be slashed and public workers’ pay frozen, while a range of programs from community service funding to housing assistance and infrastructure development would lose hundreds of millions of dollars.”

    This illustrates why social welfare programs should not be administered by the feds with tax monies confiscated from us. They skim too much off the top, using our tax money to service the debt they create by selling bonds to China and the public in order to fund their illegal wars against everything they declare illegal or a danger to freedom (their freedom, not ours).

    We the people could do much better taking care of social welfare with our own voluntary contributions to independent charities that we create and that do what WE wish, or face our dissolving them and establishing better ones.

  • http://pulse.yahoo.com/_UM75UT6SBQFK2O6OFTHZMZIGTM Corey Sittig

    It’s maddening. Planned cuts, so where those all the programs they dumped billions into that didn’t work? Did he pull some doublespeak and they also have a planned increase in other areas of defense? Hey I hear they’re freeing up another 400 billion that could go making the most evil people on this planet rich.

  • Anonymous

    Here’s where your beautiful fairy tale world of “we the people could be doing so much better if we just did it ourselves” breaks down. You say you currently have a friend with a PhD, who has a rare and incurable disease and has been completely dehumanized by the process of gaining and keeping government support during what are going to be the last years of his or her life. If you could produce this people driven utopia that would take care of those who suffer and cure the ills of the world once the government was out of the way, why not start taking care of your friend right now yourself instead of putting her through the horrors you described last night.

    Then instead of coming here and complaining about how useless the government is and how the government programs are completely incapable and inadequate and deprecatingly disastrous for all those who are condemned though no fault of their own to rely on them, you could be telling a genuinely uplifting story of anti-government, private entity success, about how you and your friends got together and are taking care of this person, have put her in her own housing and are covering the cost of her care, paying for her treatment and doing all those things that the government is now doing and how it was done humanely without the degrading and dehumanizing process that consisted in her filling out forms in offices filled with people like herself aided by overworked and disgruntled government employees whose caseloads have increased, even as budgets and available monies have shrunk, and how she didn’t have to fill out a bunch of forms and go through several layers of interviews to make sure that she wasn’t gaming the system because if she were doing that and the anti-government complainers found out then they would condemn the agencies who didn’t weed out the malingerers and fakers.

    This is where the rubber meets the road, what I can’t understand–and this isn’t the first time I have suggested this–why aren’t you and your good, generous, kind, and well-meaning friends and neighbors (those only “good” people that you know) doing all these wonderful things that you claim can be done, at some time in some utopian future–evidently after Ron Paul is president, who knows what the trigger is supposed to be to release this bountiful basket of charity of which you continuously speak– right now. The government isn’t stopping you from completely caring for this very deserving person right now, but for some ineffable reason you and your well-meaning good friends and neighbors aren’t doing this right now. You aren’t even caring for this single person, this close friend of yours. Instead of moving her to Wisconsin and putting her into that wondrous and caring collective or cooperative health care group that you linked to recently and paying for her premiums so that she could be taken care of properly and effectively, you have abandoned her or him on the government doorstep. Then in an attempt to shift your guilt for your failure to provide for even this close friend, you blame the government because it isn’t providing the treatment that you and your well-meaning neighbors have effectively denied your friend.

    So in the face of a lack of privately provided services for all those millions in need today, the dirty, nasty, mean, and completely incapable government is forced to provide in the most incompetent, demeaning and dehumanizing manner imaginable, the services that you and your well-meaning friends even with all your ideals and astoundingly provocative ideas and desirable private solutions have failed and are still failing to provide for all those in need. It appears to me from my position that it isn’t the government that has failed, it is you and your good, generous, kind, and well-meaning friends and neighbors, who, in your inability to provide for even your closest friends, have foisted all these charitable functions onto a government that you admit daily is incapable of delivering, are in fact, failing each and every day. And in your greed and inconsistency you are then denying the government the wherewithal to deal with the problems that you and your well meaning friends and neighbors through your own individual and collective failures have forced the government to deal with.

    And that is the real problem we face today!

  • Jaimie11

    “why not start taking care of your friend right now yourself”

    I am.

  • Anonymous

    the new budget is not even out yet and ron paul says it’s no good and the debt is going to continue rise. How did he read his copy of 2,488 pages so quickly .

  • Anonymous

    So why aren’t you telling us what a great job you are doing taking care of her and how you have set up a self-sustaining private charity that now takes care of all those others in the United States who suffer from the same or similar maladies, because when you first told her dramatic story you said nothing about moving in yourself to fill in the gap that was left open by those terrible government inadequacies that you so eloquently described. In fact, it sounded (in the first rendition of the story) very much like she was still going through the trials and tribulations of government dehumanization, especially tragic because by virtue of her PhD she was somehow better and more deserving of superior treatment than the rest of the rabble and welfare recipients.

  • Anonymous

    If our government officials did as you suggest our military and state department would be unable to protect American companies selling their Chinese made goods in other global locales from bribery and brigandage and would be utterly powerless in the face of popular uprisings breaking out all over the globe to install new dictators to replace those that the popular uprisings are overthrowing.

  • Anonymous

    The only thing I have to say about Obama is that he should be vetoing Republican spending plans and not debating cuts of domestic spending. If Obama were a legitimate Democratic president he would be urging massive tax increases on wealth, slashing the military budget, ending the illegal wars, prosecuting war criminals, outlawing private armies and nationalizing the military defense corporations for starters.

  • Anonymous

    There are have already been obituaries written on the wrongheaded British experiment of cutting spending to improve the economy.

  • Guest

    Actually, worstcountry, I was being sarcastic. THIS is the Socialism I was talking about. The kind that puts PEOPLE first.

  • Jaimie11

    You know old man, if you had any idea what intellect, what determination, what sheer force of will it took for her to rise out of poverty to even get a PhD from a sexist ridden academic establishment that constantly tells women they are not suited for the hard sciences, if you had any notion of the extent of her despair and disappointment when it became clear to her that all she had overcome was for naught and her career destroyed, and had you compassion for her or anyone like her, or any appreciation for the loss to medical science her inability to work has brought about, you might garner enough of my attention to make me want to read your lengthy treatises from which a glimmer of light is only rarely emitted. Until then, your class envy, your class warfare, your inability to find goodness in anything human, your slavish obsessions to overseeing what you call the underclass, and your commitment to nihilism all bore me no end.

    I am convinced you live under a bridge somewhere and emerge only to terrorize innocent and good-willed passers by for your perverse pleasure. Your too long residence in your cordoned off bit of dirt in the darkness has made you narrow and uninviting, and you will remain that way no doubt, loveless and deprived by your own choice, a destiny perhaps designed to teach you something you have obstinately not yet learned.

  • Anonymous

    I emailed the President and told him how angry I am about cutting energy subsidies – while he dines with the Harlem Globe Trotters and has private concerts. I also told him it was time to turn down the thermostat in the WH like all the people on the East Coast have had to do during this cold winter. And I told him that I didn’t think it was fair to expect the poorest of us to carry the greatest burden. Maybe he is hoping they will all move to warmer climates or maybe he JUST DOESN’T CARE.

  • Anonymous

    I am dumbfounded and overwhelmingly stunned to hear this. Almost speechless! How could the conditions that you describe in the first paragraph of this latest reply even exist in a country filled with all the good, generous, kind, well-meaning and protective people that you once claimed are the only kind of people that you know.

    I just might have some idea how she might have felt when she realized all her hard work had been for naught! I guess Austrian School economics doesn’t have much of an answer for her and her kind do they? In fact, they could care less, they only care about winners, and it doesn’t really matter to them one whit why anyone loses does it? They recognize no accidents or diseases or other extenuating circumstance; the individual is only worth what their last success produced monetarily for the whole society.

    In the world view of all Austrian School neo-liberals and their many lesser illuminati, everyone has what they have because they deserve it and effort doesn’t count, no matter to them how hard a person struggled or worked or what they had to overcome to get to any level, all that matters is where the individual winds up to them. In fact, Von Mises even celebrates gross differences in equality and the misfortunes of chance in which people get ground up and deposited like so much human refuse on the capitalist tide. And yet you pretend that people who feel this way have the answers to the problems afflicting the human condition, that is what I find so contradictory.

    Just give him a chance Ron Paul will fix everything and everyone will be able to feed a family of four on $.50 cents an hour. And sadly they will have to because that is all they will be earning.

  • DesertSun59

    Only a small minority of extremely brain dead Teatards believe that you can dig a nation out of a trillion dollar deficit hole with no hike in taxes.

    Only them.

  • DesertSun59

    The GOP is going to make sure you don’t get high speed Internet. You’ll be too likely to take to the streets like in Egypt.