Obama’s 2013 Budget Proposal Earmarks Billions for Jobs and Infrastructure

President Barack Obama laid out a $3.8 trillion spending plan on Monday that would pump billions into the economy while raising taxes for the wealthy.

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In his fiscal 2013 budget proposal, Obama asked Congress to put more than $800 billion toward job creation and infrastructure investment, while urging a minimum 30 percent tax on millionaires to help cover the costs of the stimulus.

Obama’s budget proposal earmarks billions of dollars for roads, railways, and schools, while extending tax breaks to spur hiring. His request for higher taxes on the rich has been dubbed the “Buffett Rule” after billionaire Warren Buffett.

“We built this budget around the idea that our country has always done best when everyone gets a fair shot,” Obama said. “It rejects the ‘you’re on your own’ economics that have led to a widening gap between the richest and poorest Americans.”

Proposed steps would add more than $300 billion to the economy this year alone, but deficits would remain high this year and next before starting to decline, and this borrowing would add over $6 trillion to the national debt over the next decade.

Of course, Congress is free to ignore the president’s proposal, and Republicans, who control the U.S. House of Representatives, have already made clear that they will not approve the measures.

“Obama’s budget is an insult to the American taxpayer,” said Mitt Romney, former Massachusetts governor an frontrunner in the race for the Republican presidential nomination.

With national elections coming up in November, Republicans are preparing for a battle on taxes, spending, and the size of government, while Democrats will cast their rivals as the party of the rich.

While Republicans are seeking to decrease the national deficit, they mean to do so through spending cuts rather than tax hikes. President Obama’s proposal includes $1.5 trillion in new tax revenue over the course of the next 10 years, as well as more palatable spending cuts that would help lower the deficit by $4 trillion in that period.

The president’s 10-year blueprint shows annual deficits exceeding $600 billion — the number he targeted back in September for all annual deficits after next year — in every year except 2018. The portion of the national debt held by outside investors would grow to $18.7 trillion by 2021, or 76.5 percent of the economy, $1 trillion more than it is today.

About half of the increase would be due to policy changes, according to the administration, while estimations for the other half are based on economic projections that could improve.

The national budget deficit is projected to be $1.33 trillion this year, or 8.5 percent of gross domestic product, before falling to 5.5 percent of GDP, or $901 billion, in 2013.

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To contact the reporter on this story: Emily Knapp at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com