US News

Obama budget would up taxes on rich, boost jobs spending

Feb 13, 2012, 2:22 GMT

US President Barack Obama. EPA/SHAWN THEW

Washington - US President Barack Obama on Monday sent his 2013 budget proposal to Congress laying out additional taxes on the wealthy and further spending on jobs programmes.

The budget proposal calls for 3.8 trillion dollars in spending and sets up a showdown with Republicans in Congress on how to tackle the country's massive budget deficit.

The plan focuses on priorities that are also set to dominate Obama's bid for reelection in November, including efforts to lower unemployment and ensuring households earning more than 1 million dollars per year do not pay less than a 30-per-cent tax rate.

The budget would allow tax cuts instituted by former president George W Bush to expire for the wealthy, reducing the deficit by 1.5 trillion dollars, according to a White House factsheet.

The opposition Republicans are sure to block much of the budget from becoming law and were already attacking it as too political and saying it did not go far enough to slash spending.

'You can't tax your way out of this problem. I mean, you're going to have to deal with the spending side,' Texas Congressman Jeb Hensarling said in a television interview.

The proposed budget reflects previously announced efforts to slash military spending along with cost-saving measures by trimming NASA's Mars programme, savings in health care programmes for the poor and elderly and administrative cuts across the federal government.

The budget's deficit projections, set for 1.33 trillion dollars this year, or 8.5 per cent of gross domestic product, and 901 billion dollars in 2013, or 5.5 per cent of GDP, were drawing some of the heaviest fire. The figures fall far short of promises made by Obama when he took office to cut the deficit in half by the end of his first four-year term.

White House chief of staff Jack Lew defended the figures Sunday, stressing that the recession made reducing the deficit so quickly impossible.

'I think that there's pretty broad agreement that the time for austerity is not today. We need to go on a path where, over the next several years, we bring our deficit under control,' he told broadcaster NBC. 'Right now we have a recovery that's taking root, and if we were to put in austerity measures right now, it would take the economy in the wrong way.'