President Barack Obama has unveiled a multi trillion-dollar budget focused on creating jobs and reducing the nation’s high unemployment rate.The job focused budget would boost the deficit to a record-breaking $1.56 trillion, an increase of 5.7 percent for the current budget. It also forecast that spending would rise another 3 percent in 2011 to $3.83 trillion. Much of the spending surge started in 2008 and includes costs associated with the massive economic stimulus passed by Congress to deal with the worst economic downturn since the Great Depression. The surge in the deficits reflects not only the increased spending but also a big drop in tax revenues, reflecting the 7.2 million people who have lost jobs since the recession began and weaker corporate tax receipts.
– Extending tax cuts for businesses, including a $5,000 tax credit for hiring new workers this year, help for the unemployed and $25 billion more for cash-strapped state governments.
– Extension of the popular Making Work Pay middle-class tax breaks of $400 per individual and $800 per couple through 2011. They were due to expire after this year. The budget also proposes making $250 payments to Social Security recipients to bolster their finances in a year when they are not receiving the normal cost-of-living boost to their benefit checks because of low inflation.
– The budget assumes enactment of a comprehensive health care program, the issue that dominated the president’s first year in office. Passage of that proposal is currently stalled with Democrats trying to figure out how to cope with the loss of a key Democratic seat that gave them the 60 votes they needed to overcome a Republican filibuster.
– Federal support for elementary and high school education would get what the administration termed the biggest increase in history. The Pell Grant college tuition program which would see an increase of $17 billion to just under $35 billion, helping an additional 1 million students.
– A boost in taxes on the wealthiest Americans, families making more than $250,000 annually, by allowing the Bush tax cuts of 2001 and 2003 to expire. The provision also aims to reduce the rate at which these same households write-off itemized deductions.
– The new Obama budget will also include a proposal to levy a fee on the country’s biggest banks to raise an estimated $90 billion to recover losses from the government’s $700 billion financial rescue fund (TARP).
– In a bow to worries over the soaring deficits and growing government spending, the administration proposed a three-year freeze on spending beginning in 2011 for many domestic government agencies. It would save $250 billion over the next decade by following the spending freeze with caps that would keep increases after 2013 from rising faster than inflation. Military, veterans, homeland security and big benefit programs such as Social Security and Medicare would not feel the pinch. In fact the budget requests increases for homeland security and veterans programs, with a 3.4 percent increase in the Pentagon’s core budget to $549 billion for next year.
– Obama also kills his predecessor’s signature space program to return astronauts to the moon. NASA had already spent $9.1 billion on the program, which was projected to cost $100 billion by 2020. Obama’s new budget said NASA will be “launching a bold new effort” with an extra $1.2 billion annually for five years, money expected to be used to encourage private companies to build, launch and operate their own spacecraft for the benefit of NASA and others. NASA would pay the private companies to carry U.S. astronauts.
[Update] The President’s budget was recently approved in Congress after much debate. You can see details on the final approval here, along with the 2011 deficit reduction plan proposed as part of future budgets.
~ Updates & Taxes on the 2009-2010 Economic Stimulus Credits and Payments
~ 2010 US Economic Outlook – Strong Growth Expected as Recession Fades
~ More Stimulus Checks, Social Security Payments and Tax Credits in 2010, 2011 and Beyond
~ A Second 2010 Economic Stimulus in President Obama’s New Job Programs Focusing on Small Business, Infrastructure and Home Energy Efficiency