President Barack Obama’s first preliminary budget was delivered to Congress yesterday. A 140-page summary has been posted online by the Office of Management and Budget. Full details on the President’s budget are expected in April.
Some of the highlights in the President’s preliminary budget include:
- Cutting the projected budget deficit in half by the end of his first term – from $1.75 trillion (equal to more than 12 percent of gross domestic product) to $533 billion. The major elements of his plan to accomplish this include reducing U.S. involvement in Iraq and allowing some of the Bush tax cuts to expire in 2011.
- A $634 billion “down payment” on reforming the health care system to be financed through a combination of savings in health care expenditures and limiting the value of itemized deductions for families with incomes of $250,000 or more.
- Making permanent the new “Make Work Pay” tax credit of $400 for individuals and $800 for married couples that was included in the recently-passed American Recovery and Reinvestment Act (ARRA). The tax credit will cost $66 billion next year and is currently set to expire at the end of 2010. The President proposes to pay for extending the tax credit by enacting a new cap-and-trade system that would require companies in certain industries to purchase allowances to cover their level of carbon emissions.
Unlike recent Presidential and Congressional budget proposals, the Obama budget eliminates the gimmicks that made future deficits appear artificially low. For example, the President’s budget does not ignore the continued costs of the wars in Iraq and Afghanistan, the expense of fixes to the Alternative Minimum Tax that are passed each year, or the need to respond to future natural disasters.
The President’s budget proposal is the first round of the budget-making process. Congress will begin hearings shortly on the President’s proposal and will ultimately craft its own Congressional budget resolution. The final Congressional budget resolution will likely move forward in April or May and will establish limits on the actual appropriations or spending bills that will be considered during the late spring and into summer.
We will, of course, continue to closely monitor all federal budget developments and will keep you posted on further developments.
– Steve Francisco