President Obama estimates a deficit of $1.75 trillion, equal to 12.3 percent of U.S. gross domestic product. He also delivered a $3.6 Trillion Budget Blueprint.
After the President’s “We Will Recover” speech to the nation earlier this week, Americans came away asking the question where he would get the funds to spend on all of the programs that he had promised such as health care and education. It is now apparent that many of those funds will come from the American public.
What’s The New Budget?
A whopping $3.6 trillion dollars with expanded government activism, tax increases on affluent families and businesses, and spending cuts targeted at those he says profited from “an era of profound irresponsibility.”
The budget blueprint for fiscal year 2010 is extremely ambitious: it provides national health care, reduce the energy economy’s dependence on oil and gas, and boost education. Great ideas no doubt but are they fit for troubled times?
Many Americans are saying that President Obama should focus entirely on fixing the economy and then take other things up on a case by case basis. The Republicans particularly are up in arms; they are of the view that the new budget will only perpetuate the recession.
What’s Does The New Budget Comprise?
Here is a snapshot of what is included:
- $250 billion to complete the president’s effort to rescue the financial markets and stabilize the banking sector (this is in addition to the $700 billion committed last year)
- an increase in education funding, including indexing Pell Grants for higher education to inflation and converting the popular scholarship to an automatic “entitlement” program
- $1 billion-a-year for high-speed rail (in addition to the $8 billion already allocated)
- $20.4 billion boost for the Defense Department
- $525.7 billion for “Making Work Pay”
- $800 tax credit for working couples
- $120 billion for clean energy technology
- $630 billion fund for a national health insurance program
Who Is Paying For It All?
The affluent people of America, businesses, hedge funds, private equity firms, oil and gas companies and farmers with operating incomes over $500,000 (their farm subsidies will be phased out).
What’s Everyone Saying?
President Obama says “There’s nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favor of so few.”
The Wall Street Journal says that “the budget is payback” for a lack of investment in education, clean energy, health care, and infrastructure in favor of huge tax cuts instead for the wealthy.
Reuters says that Federal spending is “skyrocketing as officials try to jolt the recession-hit economy with public-works spending and tax cuts and bail out the troubled financial industry.”
President Obama says “There are times where you can afford to redecorate your house, and there are times where you need to focus on rebuilding its foundation. Today we have to focus on foundations.”
John S, an Inspired Economist reader says “Cut the defense budget in half. Budget = balanced. Piece of cake.”
What do you say?
Image Credit: Reuters