Setting aside $750 billion ($250 billion MORE) for the banks? That's a nice assumption - if you're a banker.
His new budget is making some assumptions that I just don’t believe match reality. He is claiming an economic growth rate above 3% for next year? HUH, really? Exponential growth is what is behind us. What lies ahead is not growth. I think Obama will find that his assumptions will not even be close. Falling revenues and increased expenses will only add to the math that simply doesn’t work.
He sounds great talking about acknowledging budget realities, and yet, he is NOT adhering to them. Yes, moving wars into the budget is more real, but what about obligations to Medicare, Social Security, the FDIC, on and on? How about bringing military and defense budgets out into the open?
The White House said this morning to expect $9 trillion in deficits in the next decade. I say that’s not even close. How are we going to finance all that debt?
His budget for this year forecasts a $1.75 trillion deficit - this year! Last year our nation’s TOTAL INCOME was only $2.7 trillion. If our deficit (non-GAAP) is $1.75 trillion, that only leaves $.95 trillion to meet all the current needs of government. That deficit is 65% of income!! How is that going to work? Here’s a hint, IT’S NOT GOING TO WORK.
Revenues are falling and will continue to fall for the government. America is about to learn a huge lesson in too much debt, too much military, and too much government. All will come down and it will be painful – get ready.
Obama unveils first budget planBudgeting is always about assumptions. Government are the very worst at forecasting… as more details come out, pay attention to assumptions, follow the flow of money – it is shifting from one group to another (mainly from everyone else to the banks, but also from the wealthy to the poor).
Spending and tax outline proposes dramatic health care overhaul - vows to slash deficit, projected at $1.75 trillion in '09.
By Jeanne Sahadi, CNNMoney.com senior writer
NEW YORK (CNNMoney.com) -- President Obama on Thursday pulled back the curtain on his first detailed vision of the federal budget for the next 10 years.
His outline includes an ambitious plan to reform health care, half of which would be paid for by increasing the tax bite on high-income Americans.
Obama has said repeatedly that his first fiscal plan would have a two-pronged mission: to reduce the $1 trillion-plus deficit and make big investments in the future.
The administration estimates that the deficit for fiscal year 2009 will reach $1.75 trillion, or 12.3% of U.S. gross domestic product. That's a record in dollar terms and is the highest as a share of GDP since World War II.
Obama's promise: reduce the deficit he inherited to $533 billion by 2013.
"We will each and every one of us have to compromise on certain things we care about, but which we simply cannot afford right now. That's a sacrifice we're going to have to make," Obama said.
"What I won't do is sacrifice investments that will make America stronger, more competitive and more prosperous in the 21st century," he said.
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.
The document the White House delivered to Congress on Thursday is only a broad-stroke preview of the president's formal 2010 fiscal budget request, which is expected out in April. Lawmakers will spend the next several months debating and amending final legislation.
The Obama outline touches on the full scope of the federal government's spending and revenue collection efforts. Some of the highlights include:
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.
Let tax cuts expire for families making more than $250,000: The president's budget would allow the 2001 and 2003 tax cuts to expire for high income tax filers to help reduce the deficit. The White House estimates doing so could raise $640 billion over 10 years, although Obama's desire to extend those same cuts for lower and middle income families is estimated to increase the deficit by more than $900 billion during the same period.
Make permanent a number of tax breaks from stimulus: The president's budget seeks to make permanent the Making Work Pay credit worth up to $400 per worker ($800 per working family). It also seeks to make permanent the expansion of the child tax credit and the newly enlarged college credit now called the American
Opportunity Tax Credit.
Commits more money for renewable energy efforts: Obama's budget will call on Congress to create a cap-and-trade program in which companies would have to pay for permission to emit greenhouse gases. Revenue from the program is intended to pay for a $150 billion renewable energy fund among other things.
Obama Seeks $1 Trillion Tax Increase on High Earners, Companies
By Ryan J. Donmoyer
Feb. 26 (Bloomberg) -- President Barack Obama proposed almost $1 trillion in higher taxes on the 2.6 million highest- earning Americans, Wall Street financiers, U.S.-based multinational corporations, and oil companies, to pay for permanent breaks for lower earners.
The president’s 2010 budget proposal, released today, would reinstate the top two Clinton-era tax rates of 36 percent and 39.6 percent in 2011, up from the 33 percent and 35 percent that the wealthiest Americans currently pay. It would also raise taxes on capital gains and dividends to 20 percent for top earners, up from the 15 percent established by former President George W. Bush in 2003.
The tax increases, which Obama vowed to implement as a presidential candidate, would be the first on high-income earners since 1993 and would reverse a course set by Bush of lowering the tax burden on the nation’s wealthiest people.
“It’s a clear repudiation of Bush’s policy,” said Peter Morici, an economist at the University of Maryland in College Park. “It’s more Obama Robin Hood.”
Obama’s budget does keep in place Bush’s tax cuts that benefit lower- and middle-income earners and it preserves a sliver of policy that benefits the more affluent: A preferential tax rate on corporate dividends. Before Bush, dividends were taxed as ordinary income, or at rates as high as 39.6 percent in the 1990s.
“It is a hugely positive step to keep that part of the ‘03 changes,” said Pamela Olson, who was the top tax official in Bush’s Treasury Department in 2003 when the tax rate on dividends was reduced. “It’s good economic policy, good corporate governance policy, and good tax policy.”
Higher-income earners, primarily families with more than $250,000 of income, would face an additional tax burden under a proposal to reinstate limitations on their itemized deductions, which would subject more of their income to tax. In all, top- earning households would pay $636.7 billion in additional taxes over the next decade, Obama’s budget estimates.
The higher taxes on individuals will largely be used to pay for expanded health coverage for lower-income Americans and to make permanent Obama’s tax breaks such as a payroll tax credit worth up to $1,000 that was adopted on a temporary basis in the $787 billion fiscal stimulus measure earlier this month.
Executives at private-equity firms, venture-capital firms, some hedge funds and other partnerships that receive a 20 percent “carried interest” in the firm’s profits would see their tax burdens nearly triple under Obama’s budget.
Tax Like Wages
Most of their carried interest currently is taxed at the 15 percent rate for long-term capital gains. Obama is asking Congress to tax the profit share as ordinary income, arguing that it’s a form of wages; under his plan, most executives would pay 39.6 percent.
That proposal will likely reignite a debate that was waged by Congress in 2007 when the House of Representatives approved the change and the Senate never considered it.
Obama proposed $353.5 billion in higher taxes on corporations over the next decade, the bulk of which would come from “reforming” rules that allow U.S.-based multinational corporations such as General Electric Co. to defer U.S. tax on profits they earn overseas. GE has about $75 billion offshore on which it has never paid U.S., according to its regulatory filings.
Obama’s budget estimates such reforms and beefing up Internal Revenue Service enforcement of international tax rules would generate $210 billion in additional revenue over the next decade.
‘Last-In, First Out’
He also proposed ending a tax accounting technique called “last-in, first out” or LIFO, that primarily benefits oil and gas companies but is widely used across industries.
Republican senators in April 2006 floated such a tax increase but backed off after Exxon Mobil Corp. Chairman and Chief Executive Officer Rex Tillerson called the proposal a “backdoor windfall-profits tax.”
In addition to oil companies, the repeal of LIFO would hit retailers, automakers and makers of non-automotive heavy equipment, textile makers, consumer products, drug companies, alcohol and tobacco manufacturers and wholesalers, according to tax experts.
The accounting method has been commonly used since the 1930s and is viewed as the most accurate measure of income for financial statement purposes, according to the congressional Joint Committee on Taxation, a nonpartisan panel.
Oh, I know this song is corny as hell, but let's face it... our government is being run by central bankers who have convinced Obama that giving them an additional $750 billion this year is appropriate. It's not, its thievery. Sorry to insult the gypsies by grouping them with the thieves, but it was Cher who wrote the song, not me:
Cher - Gypsies, Tramps & Thieves: