Financial News

  • 6 March 2014, 9:57

Obama Sends 2015 Budget To Congress

President Barack Obama has unveiled a $3.9trn (£2.3trn) budget aimed at bolstering the economy, but the proposal drew immediate criticism from Republicans.

Mr Obama sent his blueprint for fiscal year 2015, which begins on October 1, to Capitol Hill on Tuesday, handing Democrats a playbook for their election-year themes of creating jobs and narrowing the income gap.

But with the entire House and one-third of the Senate facing re-election in November, campaign-year pressures all but ensure that few of the president's initiatives will go far.

Republican House Speaker John Boehner said: "The president has offered perhaps his most irresponsible budget yet.

"American families looking for jobs and opportunity will find only more government in this plan."

Mr Obama's proposal would funnel money into road building, education and other economy-boosting programmes.

It includes new spending for pre-school education and job training, expanded tax credits for 13.5 million low-income workers without children and more than $1trn (£600bn) in higher taxes over the next decade, mostly for the wealthiest Americans and corporations.

Mr Obama said: "As a country, we've got to make a decision if we're going to protect tax breaks for the wealthiest Americans or if we're going to make smart investments necessary to create jobs and grow our economy and expand opportunity for every American."

To help pay for his budget initiatives, Mr Obama envisions raising a "Buffett tax" - named for billionaire Warren Buffett - slapping minimum levies on the highest-earning people.

Taxes would also be raised on tobacco products, airline passengers and managers of private investment funds.

Congress previously has ignored those revenue proposals as well as many of Mr Obama's spending ideas.

Republican Representative Paul Ryan, the chairman of the House Budget Committee, said: "The president's budget is yet another disappointment because it reinforces the status quo.

"It would demand that families pay more so Washington can spend more."

The Republicans' recipe for accelerating economic growth includes cutting taxes or overhauling the entire tax code, and they criticise higher spending as wasteful.

Mr Obama's budget claims to obey overall agency spending limits that were enacted in December after a bipartisan compromise was reached between Mr Ryan and Democratic Senator Patty Murray.

But Mr Obama was proposing an additional package of $55bn (£33bn) in spending priorities, half for defence and half for domestic programmes.

The budget projects a 2015 deficit of $564bn (£338bn) and a shortfall this year of $649bn (£390bn).

If those figures hold true, it would mark three straight years of annual red ink under $1trn (£600bn), following four previous years when deficits exceeded that mark every time.

The president's spending plan also takes credit for reducing accumulated deficits over coming decade by $2.2trn (£1.3trn).

But nearly one-third of that comes from claimed savings from the end of the US war in Iraq and the gradual withdrawal of forces from Afghanistan.

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