February 12, 2012

Barack Obama and the US budget of 2013

The current US president, Barack Obama, has released his proposal for the 2013 budget. If Obama survives the election of 2012, this is what the US economy should expect :
  • Reduced borrowing with $3 trillion over 10 years and spending more to decrease the unemployment
  • Reductions in spending on federal health programs and the military
  • A small raise for federal workers
  • $1.5 trillion in new taxes on corporations, hedge-fund managers and the wealthy (everything is not actually new taxes, some are the expiration of temporary lower taxes from George Bush)
  • Households earning more than $1 million should expect to pay 30 percent of their income in federal taxes
  • $850 billion in savings from ending the wars in Afghanistan and Iraq
  • New investments in education, manufacturing and federal research and development
  • Every dollar in tax increases would be matched with $2.50 in spending cuts

The result of this budget is an increase in the alarming US deficit to $1.33 trillion. But the plan is to lower the deficit to $900 billion in 2013, and then slowly lower the deficit more up to 2022. The main point seems to be that the growth of the deficit should be less than the growth of the US economy.