Obama’s budget proposal plan makes necessary compromises
Published: Wednesday, February 16, 2011
Updated: Wednesday, February 16, 2011 19:02
President Obama's official 2012 budget proposal was released Feb. 14, but his proposals have already begun to spark controversy. Although the administration has received heat from Democrats, who claim that Obama is turning his back on those who put him in office, as well as Republicans, who argue that the budget is far too liberal, the president's proposals are not without their merits. Most of the President Obama's proposals revolve around permanent extensions of stimulus programs that would help lower-income families, while others focus on tax increases and tax policy changes that would affect higher-income earners.
First, the president plans to let the 2001 and 2003 Bush tax cuts expire for higher-income earners. This proposal would raised the two highest tax brackets from 33 percent and 36 percent to 35 percent and 39.6 percent, respectively. If the proposal passes, it would raise almost $700 billion over the next 10 years.
President Obama also proposed an increase in limits on itemized deductions and a tax raise on investment fund manager profits, both of which would mainly affect the highest income earners in the country. The administration's quest to end years of too-low taxes on the wealthy marks a bold and courageous step toward closing the deficit.
Although the president was criticized for his plans to cut the budgets of programs that help mainly low-income Americans, such as the Low Income Home Energy Assistance Program (LIHEAP), his proposed budget still takes large steps toward providing relief for low-income families.
The president also plans to further his mission to protect middle class Americans by making the middle class tax cuts permanent. Although this cut will cost the government about $2 trillion over the next ten years, it seems to be a wise move considering the harsh blows the middle class has received throughout the past half-decade.
The proposal will further extend aid to middle and lower-class Americans by extending the Make Work Pay Credit, permanently extending the low-income tax credit to low-income families with three or more children and by expanding the child-care tax credit. Although these extensions would likely increase the deficit, much of this increased spending would be offset by the policies intended to target pockets of high-income earners.
In his budget, President Obama also offers a more appealing option to states who hope to decrease their deficits. The proposal calls for an increase in the amount of wages that can be subject to unemployment taxes, making it possible for states to increase revenue without having to raise taxes.
Although the proposal threatens to further alienate corporate America from the Obama administration, it offers good news to states whose governors need to close huge deficits without raising taxes. In states such as California, where Proposition 13 made increasing taxes nearly impossible, especially in local contexts, President Obama's proposal is a viable solution to budget crises.
Despite criticism and some concern over cuts to programs that benefit the poor, President Obama's budget proposal is relatively realistic and responsible. The administration is obviously planning to make great strides in deficit reduction, but it also plans to continue pumping money into the economy so that middle-class and lower-income families can get back on their feet. The 2012 proposal provides hope for an end to the nation's record debt, even if it is a slow crawl to the end of the recession.