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President Obama will submit his budget for the 2013 fiscal year that begins Oct. 1 to Congress on Monday. Many of the spending proposals included in the budget resemble initiatives he proffered last September, including a $350 billion short-term jobs creation plan. Congress blocked Obama's $447 billion jobs proposal last year. Obama's budget calls for raising taxes on the rich, including the so-called "Buffett Rule" that affects Americans making more than $1 million a year. Obama would replace the Alternative Minimum Tax with the "Buffett Rule" which was adopted in 1969 but became anachronistic because it did not adjust for inflation, therefore targeting both wealthier and middle class households. Republicans oppose tax increases on all income groups.
Whether or not Congress will pass Obama's budget remains unclear. Republicans have rejected many of Obama's previous spending proposals and Democrats and Republicans alike are reluctant to attach themselves to anything related to spending and domestic program cuts during an election year. The White House forecasts that the budget deficit will slip to $901 billion in fiscal 2013, down from this year's $1.33 trillion estimate. Spending cuts will total $4 trillion over the next decade. Obama's budget hews closely to the deficit-reduction law agreed to in August by Congress.
Obama officially unveiled his budget at Northern Virginia Community College, a backdrop intended to emphasize his commitment to the nation's education system. Obama's budget allots at least $65 billion for education resources.
On Sunday White House Chief of Staff Jacob Lew said the budget addresses the ballooning deficit and includes new revenue sources needed to bolster the fragile economic recovery.
"The time for austerity is not today," Lew told NBC News. "If we were to put in austerity measures right now, it would take the economy in the wrong way."
Maya MacGuineas, president of the Committee for a Responsible Budget, says the president's budget does not go far enough to tackle the country's massive debt challenges.
"In order to fix our debt and deficit problems, we are going to have to deal with every part of the budget," MacGuineas tells Aaron Task in the above video. "This budget doesn't do enough to reform our healthcare and our social security programs. We have a fiscal crisis breathing down our neck."
MacGuineas says she's concerned that Congress may not act on the budget until after the November election, a decision that could have severe consequences.
"The real action when it comes to budgeting is what goes on in Congress," she notes. "Congress needs to hammer out some compromises." Doing nothing would "dig this deficit hole even deeper."
Budget highlights/projections include:
- $50 billion in spending to improve roads, rails and airport runways (the administration estimates this will create "thousands of jobs")
- $60 billion in spending to modernize schools and help states hire teachers, emergency workers
- Giving small businesses a tax credit to hire new employees
- Requiring households that make more than $1 million to pay at least 30 percent in taxes
- Allowing the Bush 2001 and 2003 tax cuts expire for families making $250,00 or more per year
- For every $1 in revenue the government raises, the government will cut $2.50 in spending
- $360 billion cut in Medicare and Medicaid over 10 years and $278 billion cut from programs like farm subsidies and federal employees' pensions
- Defense spending - excluding war funding - to total $487 billion over 10 years, a decrease from the 2012 budget and the first drop since the 1990s
- Environmental Protection Agency funding drops to $8.34 billion, the agency's third straight round of cuts
- $61 billion tax on big banks over a decade to assist struggling homeowners and recover the costs of the financial bailout
- Raising the top individual income tax rate to 39.6% for the wealthiest taxpayers starting in fiscal 2013
- Tax breaks for oil, gas and coal companies are eliminated
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