February 27th, 2009
Obama’s $3.6 Trillion Budget
President Obama released his budget yesterday and I wanted to recap and share my thoughts on the new budget. The $3.6 trillion budget calls for an increase in the US deficit to nearly $1.75 trillion, quadrupling the 2008 deficit.
Obama is pledging to reduce cut the federal deficit in half by the end of his first term. In support of his pledge his administration has identified $2 trillion in savings over the next decade. While the increase in federal funding is marked to covering the banking industry, healthcare, military, education and renewable energy, Obama is expecting to stimulate the economy, create new jobs, and stabilize the financial sector. Through the elimination of tax breaks for the wealthy, cutting unnecessary government programs, and overall fiscal responsibility, Obama hopes to reduce the deficit in the coming years.
With a budget of this scale, and the amount of money that is being allocated to different industries, this is a policy change of huge significance. I question the government’s to put work together to execute on such a policy. Obama’s budget is currently only a blueprint, with the details of the budget yet to be ironed out and is expected to be delivered by April. Exactly how this will affect you and me, the individual US citizen, is completely dependent on the execution and details of the budget. One thing is certain, if you make more than $250,000 yearly, you should get ready for tax changes that will impact you negatively.
This plan is very ambitious and is going to set the stage for fierce political fights in the halls of Congress and with lobbyist groups. Predictably, Republicans are criticizing the budget, claiming it doesn’t make sense to increase government spending in a time of recession, while Democrats claim this increased spending is the most prudent way out of the recession.
Underlying feelings of class warfare will undoubtedly rise as the wealthy are taxed, oil companies and other big business see their tax benefits shrink. I feel that Obama’s projections are highly optimistic, as his budget forecasts that the economy will grow by 3.2% in 2010, with steady growth in the following years. Given the current state of the economy, with both the banking and housing sectors in shambles, I don’t foresee the economy turning around that much, that quickly. I hope I am wrong and Obama and Congress are able to turn things around.
As always, any comments, questions, or opinions are always appreciated.
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