Obama Sending Massive First Budget To Congress

President Barack Obama is sending Congress a $3 trillion-plus budget, a spending blueprint that will project astronomical deficits that reflect the cost of getting the country out of a deep recession and a severe financial crisis.

Obama's budget is a 140-page outline, with the complete details scheduled to come in mid- to late-April, when the new administration sends up the massive budget books that will flesh out its spending plan.

However, the submission of the bare budget outline was certain to set off fierce debate in Congress over Obama's spending and tax priorities. The document includes additional requests for the current year and proposals for the 2010 budget year, which begins Oct. 1.

The president wants Congress to extend the $400 annual tax cut due to start showing up in workers' paychecks in April, and it seeks an extension of the tax cuts passed in 2001 and 2003 for couples earning less than $250,000 per year. Those tax cuts were due to expire at the end of 2010.

To pay for the middle-class tax relief and the effort to increase health coverage, Obama's budget makes significant cuts on the rate of growth in other areas of health care and seeks to trim a variety of other government programs, including subsidies earned by farmers with revenue of more than $500,000 per year.

Even with all the savings, the cost of the $787 billion economic stimulus bill will push the deficit for this year to more than $1.5 trillion. The deficit is expected to remain around $1 trillion for the next two years before starting to decline to $533 billion in 2013, according to budget projections.

Obama's budget proposal proposes achieving $634 billion in savings on projected health care spending and diverting those resources to expanding coverage of uninsured Americans. The $634 billion represents a little more than half the money that would be needed to extend health insurance to all of the 48 million Americans now uninsured.

Americans now spend a total of $2.4 trillion a year on health care.

Obama also will ask for an additional $75 billion to cover the costs of wars in Iraq and Afghanistan through September, the end of the current budget year.

Obama's budget proposal would effectively raise income taxes and curb tax deductions on couples making more than $250,000 a year, beginning in 2011. By not extending former President George W. Bush's tax cuts for wealthier filers, Obama would allow the marginal rate on household incomes above $250,000 to rise from 35 percent to 39.6 percent.

The plan also contains a contentious proposal to raise hundreds of billions of dollars by auctioning off permits to exceed carbon emissions caps, which Obama wants to impose on users of fossil fuels to address global warming.

Some of the revenues from the pollution permits would be used to extend the "Making Work Pay" tax credit of $400 for individuals and $800 for couples, as provided in the just-passed economic stimulus bill.

About half of what officials characterized as a $634 billion "down payment" toward health care coverage for every American would come from cuts in Medicare. That is sure to incite battles with doctors, hospitals, health insurance companies and drug manufacturers.

Some of the Medicare savings would come from scaling back payments to private insurance plans that serve older Americans, which many analysts believe to be inflated. Other proposals include charging upper-income beneficiaries a higher premium for Medicare's prescription drug coverage.

To raise the other half, Obama wants to reduce the rate by which wealthier people can cut their taxes through deductions for mortgage interest, charitable contributions, local taxes and other expenses to 28 cents on the dollar, rather than the 35 cents they can claim now. Even more money would be raised if the top rate reverts to 39.6 percent, as Obama wants.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, called Obama's proposal to tax the wealthy to finance health care reform a starting point. But he wants to also examine taxing some of health insurance benefits provided by employers — an idea rejected by Obama in last year's presidential campaign.

Budget documents provided to The Associated Press show that Obama will not lay out a detailed blueprint for a health care overhaul, but a set of broad policy principles and some specific ideas for how to raise a big chunk of the money.

Obama's promise to phase out direct payments to farming operations with revenues above $500,000 a year is sure to cause concerns among rural Democrats.

Even after all those difficult choices, cutting about $2 trillion from the budget over 10 years, Obama's budget still would feature huge deficits.

At $533 billion, the deficit in 2013 will be about 3 percent of the size of the economy, a level that administration officials said would be manageable.

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  • by Mary Location: Chocowinity on Feb 26, 2009 at 04:59 PM
    I hear many middle class Americans talking about quitting their job or wishing to get fired so they can sit back and collect the FREE handouts of welfare. We are rewarding and promoting wrong behavior. So with the dumbing down of American and everyone wanting their piece of the action, the values are all screwed up. Obuma is sending the wrong message. In 30 days we have seen more debt created in the history of the USA. It is sickening. Just making more dependants. I think Obama Snake Oil is the only one with any sense of these posts. He knows what is happening.
  • by lol on Feb 26, 2009 at 12:29 PM
    Alicia, When are you people going to quit thinking that you can just up and refuse to pay taxes. If you take the time to notice your taxes are deducted from you pay before you ever get it. Now go ask your BOSS to stop deducting tax from your pay and see how fast he/she laughs you out of the country. There are to ways to stop paying taxes that is quit your job or die, you all are welcome to take your pick.
  • by Alicia Location: New Bern on Feb 26, 2009 at 07:26 AM
    When will you people quit with all the blame game at one party or another! Both have their greedy little hands in all of our pockets and I wish every American would make a stand and absolutely refuse to pay taxes and could their prisons hold all of us? We would be well fed and we could live off of the thieves's money then.Everyone praises Obamanation but his greedy hand has been in the pot too while Bush was in office. I did not hear him turn down any of our money so shut up already about Bush. Now it is a hypocrite in office. Even worse!
  • by Millie Location: Windsor on Feb 26, 2009 at 07:26 AM
    Cutting medicare payments to pay for lazy, irresponsible folks to receive universal health care seems unreal. Isn't it ironic that senior citizens who have kept their faith, served their country, worked hard, paid their mortgages and taxes, have been targeted as expendable.
  • by Obama Snake Oil Co Location: Washington on Feb 26, 2009 at 06:26 AM
    Barlow, do you like the grape or cherry koolaide? I think you are adding too much sugar to it. Ron is correct in his statement. The facts support that when the "rich" spend, everybody benefits. When the poor spend, it isn't enough to support the country. So it is OK to print 3 trillion in money? Well, its not just your children that was sold out, its also their grandchildren. Well, you voted for this and will pay for this over the next years to come. This nation will be lucky to recover from it. So comrads, get used to government running your lives.
  • by Barlow Location: Winterville on Feb 26, 2009 at 05:57 AM
    Here's the data. check it out ...http://www.washingtonmonthly.com/archives/individual/2005_05/006282.php Oh, I'm sorry, the very rich do MUCH better when the Republicans run the show
  • by Ron Location: Merritt, NC on Feb 26, 2009 at 05:30 AM
    Barlowe, do you make up facts out of thin air? The only reason Clinton's second term was fiscally responsible was that Conservative Republicans held the majority in the Senate and the House. Throwing more money at the problem will not solve the problem. What is needed is to cut spending drastically, cut corporate taxes, cut capital gains taxes, and cut taxes on the highest earners. When are you liberals going to realize that you elected an incompetent bungler whose primary goal is to ruin this country?
  • by Barlow Location: Winterville on Feb 26, 2009 at 04:56 AM
    There is also a plan to cut the deficit long term. If you want to see how the Democrats handle money compared to the Republicans look at the Clinton surplus compared to Bush's unbelievable spending spree. Historically, the economy has been much better under Democrats than Republican. It just takes awhile to clean up the mess sometimes
  • by Mike Location: Edenton on Feb 26, 2009 at 02:50 AM
    ..... and the Dems complained about the Bush deficit? That wasn't a drop in the bucket compared to this. They said our children would be paying for it. Now it's our grandchildren.

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