President Obama released a $4 trillion budget proposal Monday that would provide tax breaks for the middle class, raise some of the taxes for wealthy individuals and corporations, and end the budget sequester. It would slightly decrease the deficit and keep the debt at what the White House is calling sustainable levels. The budget
includes the initiatives he previewed in the State of the Union address and in speeches around the country since the beginning of the year. At the top level it includes $1.091 trillion in discretionary spending in the 2016 fiscal year, $74 billion above the spending caps mandated by the "sequestration" spending cuts that Obama wants to eliminate.
White House officials say their goal is to keep deficits stable relative to the gross domestic product and bring the long-term debt down slightly. The $474 billion deficit for next year would be about 2.5 percent of GDP, and it would end up in about the same place for 2025 even though the dollar amount would rise to $639 billion, according to a source familiar with the details. The federal debt—the cumulative total of deficits that the government owes—would start at 75 percent of GDP in 2016 and ease down to 73.3 percent in 2025.
The White House says it will save $400 million in healthcare spending through the cuts already built in through Obamacare's Medicare reforms and the
new payment restructuring program. The budget assumes immigration reform as well, arguing the influx of new legal workers will increase revenues. It would also cut crop insurance subsidies.
It would raise taxes on capital gains and on inherited capital gains and levy a minimum 19 percent tax on "American corporate profits that are kept overseas." It also includes a one-time, 14 percent tax on the overseas earnings of American firms that is expected to raise $478 billion, which would be earmarked for rebuilding infrastructure.
On the spending side, the budget includes $41 million for the first year of the president's community college plan to allow two-years of free tuition and $105 million for "trade adjustment assistance" to help retrain workers who lost jobs to trade deals. The budget includes an ambitious program to provide more assistance to families with young children, making childcare more affordable by increasing tax breaks to families.
The budget doesn't include Social Security or other entitlement programs, beyond the Medicare payment reforms. For his part, Rep. Paul Ryan says Republicans won't try to force those reforms in the budget negotiations, but they've already done that by manufacturing a crisis in the disability program, trying to force reforms to Social Security as a whole.