President Barack Obama introduced to Congress a $3.8 billion federal budget plan aimed at healing the sequester budget cuts Wednesday. The plan aims for a grand bargain by balancing tax increases that conservatives dislike with entitlement cuts that liberals abhor.
Obama’s federal budget plan raises taxes on the wealthiest Americans. Those making over $1 million a year would have to pay at least 30 percent more of their income in taxes. The plan also imposes a 28 percent cap on tax deductions for high earners.
The proposed budget slows the growth of entitlement programs such as Social Security and Medicare. Liberals threw a fit last week when media reports revealed that Obama’s budget would tie the growth of certain entitlement programs to “chained CPI,” which would ultimately result in a cut to those programs. The plan also reduces payments to Medicare providers. These cuts would help offset the sequester budgets cuts that are forcing federal departments to furlough federal employees.
The budget projects deficit reductions of $1.8 trillion over the next ten years. In addition to money saved on entitlement programs and revenue raised from taxing the rich, Obama’s federal budget plan nearly doubles the federal tax on cigarettes. The new tax would be $1.95 a pack. This money would be used to fund a new pre-school program for four-year-olds.
The budget would take effect on the first day of October and increases spending 2.5 percent over this year.
Obama’s federal budget plan has little chance of becoming law. In short, everyone hates it. The budget alienates liberals in an effort to reach out to conservatives, an effort House Speaker John Boehner deemed non-existent after seeing media reports last week.
This comes as no surprise to the White House. Instead, officials hope the budget proposal can serve as a blueprint. The administration hopes to reach out to Republicans who have given reason to believe a compromise may be possible.
“There continue to be people who are on the Republican side … in the Senate at least, who are saying things that would give you some hope that there is a path to a deal,” a senior administration official told reporters.
In short, Obama’s federal budget plan to heal sequester budget cuts is dead on arrival, and it’s not that big a deal.