President Obama unveiled his fiscal year 2016 budget Monday, a proposal that would spend $3.99 trillion while running a $474 billion deficit. The document will serve as a blueprint for White House policy for upcoming fights with Republicans on immigration, health care, infrastructure, and tax reform.
Highlights every conservative should know include:
1. Higher Spending
Obama's budget would increase spending by $74 billion in 2016 compared to current law, and by $322 billion over the next five years. Federal government spending as a percentage of GDP would rise from 20.3 percent in 2014 to 22.2 percent in 2025.
The biggest spending increase items in Obama's budget include $116 billion for transportation infrastructure, $78 billion for low-income family child care, and $60 billion for free community college.
2. Higher Taxes
Obama's budget raises taxes on all Americans by $1.44 trillion over the next decade, although the bulk of the tab would be picked up by wealthier Americans. Federal government revenues as a percent of GDP would rise from 17.5 percent in 2014 to 19.7 percent in 2025.
Most of Obama's tax hike, $638 billion, would come from limiting the value of selected tax expenditures, including the charitable tax deduction, a rejected policy Obama has pushed before. Obama would also force U.S. corporations to pay a one-time 14 percent tax on all profits currently being held overseas. This would net $268 billion. The budget also enacts a 19 percent tax on all foreign profits going forward, but the revenues from that tax would help pay to reduce the domestic corporate tax rate from 35 percent to 28 percent.
The other Obama tax hikes include $208 billion in higher taxes on capital gains, a $112 billion tax on banks, and a $95 billion tobacco tax hike.
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According to the non-partisan Tax Policy Center, the wealthiest families would pay far more under Obama's budget, while low-income families would see a big tax cut. Middle-class families "would see relatively modest changes in their tax bills," and some would even see a tax hike.
3. Rising Debt
The year before Obama took office, the federal debt was $9.99 trillion. According to his latest budget, the federal debt will reach $19.33 trillion in 2016, Obama's last year in office. Interest on the debt this year will be $229 billion, and is scheduled to rise to $785 billion in 2025 under Obama's plan.
While it is true that deficits have fallen from a record $1.4 trillion in Obama's first year to $474 billion in 2016, deficits are set to begin rising again as soon as Obama leaves office, reaching $687 billion in 2025. For comparison's sake, the highest deficit ever under President Bush was $458 billion.
4. Slower Economic Growth
Last week, the CBO's Budget and Economic Outlook lowered it's long-term economic growth projection from 2.7 percent to 2.4 percent.
The Obama budget followed suit today, estimating that GDP will be about $700 billion smaller in 2020 than they did last year.
5. More Money Diverted From Highway Trust Fund
Obama may like to sell his infrastructure plan as an effort to rebuild American roads bridges, but in reality it is just another liberal attempt to raid the Highway Trust Fund and spend gas tax revenues on mass transit projects. Obama's budget even slyly renames the Highway Trust Fund the "Transportation Trust Fund."
Already almost 20 percent of all Highway Trust Fund revenue is diverted from highways to mass transit spending. Obama's budget would accelerate this trend by "injecting mush needed investment into the existing transit and intercity passenger rail systems" as well as "reducing transportation emissions by responding to the greater demand and travel growth in public transit."
The Bottom Line
None of the policy proposals in Obama's budget will be come law and very few will even be introduced in Congress. What the document does do is serve as an opening negotiation point for the White House when Republicans in Congress reach deadlines on must pass legislation like the Medicare reimbursement rate Doc Fix, the insolvency of the Highway Trust Fund, and expiring tax provisions.
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