President says he’ll cut deficit by two-thirds
After he handed out billions of dollars in quick loans to banks, auto retailers and the nation as a whole, President Barack Obama’s next goal may surprise you. He plans to cut the annual deficit by two-thirds in the next four years.
Big plans
At the beginning of Obama’s presidency, the national debt was $1.2 trillion. That amount will rise to $1.5 trillion after initial spending from the quick loans and other programs in the economic stimulus package. However, Obama’s economic projections say that by the end of 2013, the deficit will be down to $533 billion.
How to slash a deficit
The major components of Obama’s plan are Iraq troop withdrawal and higher taxes on the wealthy. Obama says he’ll release his budget outline Thursday. This outline will also make clear how he intends to deliver campaign promises on health care and energy policy, according to the New York Times.
Funding the Iraq war has accounted for a huge percentage of the nation’s spending, and Obama says his troop withdrawal plan will save about $90 billion.
A few new taxes
Obama proposes taxing income from investments in hedge funds and private equity partners at ordinary income tax rates. Right now those types of income are taxed like capital gains, at the rate of 15 percent. His policy would consider those funds income, and thus they could be taxed up to 35 percent, which is what the most wealthy pay in income tax.
Fewer tax cuts
During Obama’s campaign, he said he would immediately get rid of the Bush tax cuts on income, dividends and capital gains. However, because of the economy crisis, he plans to instead let them lapse, as scheduled, after 2010 for individuals who make more than $250,000 a year.
Spending cuts
Obama’s proposal will also include spending cuts. One program he proposes spending less money on is Medicare Advantage, which subsidizes insurance companies that cover seniors who could acquire health coverage directly from the government.
He plans to scale back spending on on private contractors. This type of spending went up considerably during the Bush administration. Many of the cuts Obama proposes include cutting spending on private contractors used for defense purposes.
Campaign promises
During his campaign Obama said he would double the United States’ spending on foreign aid. However, given the stimulus package and the economic hardship the nation faces, Obama concedes he will have to scale back that promise.
Healthy promises
However, Obama will not scale back his promise to make sure the 46 million Americans who don’t have health insurance will be covered. He says he can achieve this promise without adding to the deficit thanks to cost-saving changes to health care and by raising revenues.
Energetic promises
Obama says his energy policy will create new revenue by 2012. He plans to charge companies for permits for greenhouse gas emissions, which would be the main revenue generator. Obama assumes that companies will pass the cost of the permits on to customers, so he says the government will use most of the revenue to offset higher utility bills and related expenses. The remaining revenues would go toward developing alternative energy.
Closing arguments
Obama says is strategy is ”investing in what we need, cutting what we don’t, and restoring fiscal discipline.”
“We can’t generate sustained growth without getting our deficits under control,” he added.
After all the quick loans being handed out, it’s nice to see some debt management kicking in.
Belinda wrote: “Big plans
At the beginning of Obama’s presidency, the national debt was $1.2 trillion. That amount will rise to $1.5 trillion after initial spending from the quick loans and other programs in the economic stimulus package. However, Obama’s economic projections say that by the end of 2013, the deficit will be down to $533 billion.”
Incorrect statement – the national debt was $10,717,998,123,287.70 on Feb. 5, 2009, which represented a $89,116,637,777.47 increase since January 16, 2009 – the last day that the Treasury Department calculated the debt during the Bush Administration. It grew by $693,273,226,375.21 since Oct. 1, 2008, the beginning of Fiscal Year 2009.
I certainly hope that he can make good on these promises, because the deficit, if left unchecked, is going to leave us in a world of hurt and very little has been done to address it. It seems a bit naive to assume that just Obama is going to be able to do this – that’s a dangerous assumption to make about a President – but it can be done. It’s going to be perhaps the hardest challenge our country has faced in a while, but it’s doable.