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GOP critics hit Obama's $3.8 trillion budget

By Martin Crutsinger
AP Economics Writer

POSTED:
LAST UPDATED: 09:43 a.m. HST, Feb 14, 2012


WASHINGTON » Treasury Secretary Timothy Geithner told Congress Tuesday that the president's new $3.8 trillion spending plan would impose new taxes on only 2 percent of the nation's wealthiest families and the alternative would be to seek more painful cuts in other government programs such as defense, Social Security and Medicare.

Geithner defended the new budget plan in the face of intense attacks from GOP members of the Senate Finance Committee. Republican Sen. Orrin Hatch of Utah told Geithner that the administration's spending plan would give the country a "permanently larger, European-inspired government."

But Geithner said deeper spending cuts now would damage economic growth and push more Americans into poverty at a time when the economy is still struggling to recover from a deep recession.

Geithner told the committee that the administration hopes to send Congress next week a framework for making changes in the country's corporate tax structure.

He said the administration would not offer detailed legislative language but rather broad principles for corporate tax reform. He said the administration would propose eliminating a number of current business tax breaks in an effort to lower the corporate tax rate.

The nominal U.S. corporate tax rate is 35 percent, the highest in the world after Japan, but few companies pay that much after taking various deductions.

Obama has proposed lowering that tax rate but has not said by how much it should be lowered. The president has also proposed ending tax breaks for U.S. companies moving jobs or profits to foreign countries while suggesting tax breaks for businesses that move jobs back to the United States.

Geithner did not offer any hints about what recommendations the administration will make on corporate rates in its submission to Congress.

Congress may put off the tough decisions on the budget until after the November elections, but the spending document will certainly be used as a campaign document for Obama and a key target for Republicans running against Democrats.

Republican Mitt Romney, who is campaigning for the GOP nomination to challenge Obama in the fall, called the budget Obama released Monday "an insult to the American taxpayer." GOP candidates Rick Santorum, Newt Gingrich and Ron Paul are all advocating bigger spending cuts to control the deficits, and all the GOP candidates oppose Obama's tax increases.

"The president's budget is a gloomy reflection of his failed policies of the past, not a bold plan for America's future," House Speaker John Boehner, R-Ohio, said Monday after the budget was released. "The president offered a collection of rehashes, gimmicks and tax increases that will make our economy worse."

Republicans are arguing for deeper spending cuts and a frontal assault on the biggest drivers of the deficit, the soaring costs of Medicare and Medicaid, whose already sizable costs are projected to double in future years as baby boomers retire.

Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee, said Monday that he expected the Republican-controlled House would in coming weeks pass an alternative to the Obama budget that would gain control of the deficit, not by raising taxes but by curtailing Medicare and Medicaid.

"President Obama's irresponsible budget is a recipe for a debt crisis and the decline of America," Ryan said.

Obama's cuts in Medicare and Medicaid avoid cuts in benefits and instead make modest trims in payments to health care providers. In contrast, the Republican House last year approved Ryan's plan, which would essentially transform Medicare into a voucher system in which future seniors would get a fixed amount to buy medical insurance.

The Obama budget proposes spending $3.8 trillion in the 2013 budget year, which begins Oct. 1. It would achieve $4 trillion in deficit cuts in part through restraining the growth of many government programs, adhering to the agreement Congress approved in August for spending caps to achieve $900 billion in deficit reduction over a decade.

Obama's plan also proposes additional deficit reduction in order to avoid $1.2 trillion in across-the-board cuts scheduled to take effect next January.

But the president relies on $1.5 trillion in tax increases, mainly by allowing the Bush-era tax cuts to expire on families making more than $250,000 per year, imposing additional taxes on those making more than $1 million per year and eliminating various corporate tax breaks.

The tax increases all have been rejected by Republicans.

With both parties holding entrenched positions, it is very likely that no solution will be found before the November elections, with both sides preferring to use the debate to score political points.

If that occurs, Congress will probably be back in Washington after the November elections for a lame-duck session to resolve the battle over taxes and spending cuts.

Lawmakers are facing end-of-the-year deadlines when the Bush-era tax cuts on all taxpayers expire and across-the-board spending cuts will go into effect if lawmakers can't agree on $1.2 trillion in further deficit reduction over the next decade.







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jomapaja wrote:
Is there anything the Republicans like about our President. It seem no matter what he does they are against it. It is the same old story, cut spending, BUT no tax hike for rich, just sock it to the middle class. When are we going to wake up and start working togather. It appears the only thing the Repulicans care about is defeating the President, no matter what it costs our country!
on February 14,2012 | 04:42AM
Halemaumau wrote:
What's there to like... have you been sipping the kool-aid? In a free-market economy like ours, it's the entrepreneurs who create jobs. They do this by starting new businesses, and by expanding businesses that are already up and running. If you want to create more jobs, you create an environment in which entrepreneurs will thrive. It's no accident that many of the "rich" are also entrepreneurs. It makes no sense to say you want more jobs but oppose entrepreneurs (the rich) because when they succeed they often wind up with more money than the rest of us. You cannot have it both ways. In a free-market economy such as ours, the government also makes and enforces the rules and leaves the rest up to you whether to succeed or fail. However Obama wishes to tell you HOW to operate your business as well. The government is a poor example of how to run a business. With Obama, the growth of government far exceeds the growth of economy. I want to succeed therefore Obama must go.
on February 14,2012 | 08:26AM
NanakuliBoss wrote:
Did the economy and free- market thrive during the two terms of Bush? I mean those tax cuts on the rich was in place but there is no proof of phenomical growth and prosperity? So when is this growth going to " kick in"? We've been waiting. Most business feed off of the consumers, the little guys. It's time for rich start paying their fair share.
on February 14,2012 | 01:10PM
kuewa wrote:
You seem to be confusing rich people with businesses. Businesses create jobs, people have a poor track record of doing the same; the exception being small business owners, most of whom are not among the 1%. The proposed tax "increases" restore pre-Bush tax rates only for those rich people who MAKE more than $1M/year; very few, if any, of these individuals are small business owners. The upper echelons of the 1% who make money serving on boards or as corporate officers of public companies have little direct effect on hiring. Businesses large and small retain Federal tax incentives for job creation; the President has proposed to expand these incentives, while discouraging businesses from moving jobs overseas. In addition, businesses have done very well under President Obama, recovering much of the value that was lost during the Bush era and employment trends have been reversed even if the degree and rate of turn-around doesn't meet your standard..
on February 14,2012 | 01:19PM
frontman wrote:
$3.8 trillion budget and he asks for 250 miion for his "home" state rail project. This guy is a joke.
on February 14,2012 | 10:22AM
NanakuliBoss wrote:
For 2012, the rest will come. It was never promised to be bulk payment. Even casinos don't pay out bulk sums on jackpots.
on February 14,2012 | 01:12PM
kainalu wrote:
Does this require to be "reported" anymore? The Retardicants stated agenda is "to make Obama fail by any means necessary" - Mitch McConnell. Duh. "Country First" obviously, is a distant second.
on February 14,2012 | 06:58AM
kainalu wrote:
Does this need to be "reported" anymore? The GOP's stated agenda is "to make President Obama fail by any means necessary". The "news" here is, why haven't these Republicans haven't been put on trial for treason and executed?
on February 14,2012 | 07:00AM
Halemaumau wrote:
The same could be said about the Obama Administration.
on February 14,2012 | 07:53AM
NanakuliBoss wrote:
Yes,GOP will do everything to say NO to the President. Right now their mantra is, we'll vote for any GOP candidate that can beat Obama. They flip flop from Cain,Gingrich,Romney,Santorum some even still worship Bachmann and palin! Perry was a front runner.what happened, gone! Even their issues are flopped all over the place. Their drinking their kool aid with a quart of vodka.
on February 14,2012 | 01:18PM
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