Obama budget taxes wealthy, cuts Social Security and Medicare while adding new stimulus

President Barack Obama on Wednesday unveiled a budget that would cut entitlement programs, tax the wealthy and reduce the U.S. budget deficit by nearly $2 trillion while funneling new money to education and infrastructure in an effort to bolster the middle class.

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The 10-year blueprint contains an offer made to House Speaker John Boehner during the “fiscal cliff” talks late last year, and Obama calls the measure a compromise that demonstrates his goal of a tax and spending deal with Republicans.

“The package I am offering includes some difficult cuts that I do not particularly like,” Obama said in his budget message.

The plan includes $1 billion to launch a network of “manufacturing innovation institutes” to encourage public-private partnerships and boost the manufacturing industry, reprised from Obama’s 2013 budget. Also included are $50 billion worth of infrastructure investments and the infrastructure bank, both familiar from the president’s 2011 American Jobs Act. And the new budget would boost the federal minimum wage to $9 per hour. Obama championed the idea of raising the federal minimum wage during his 2008 campaign but did not bring it up again until his most recent State of the Union address. – Huff Po’s article ” – Obama Budget Packed With Hard-To-Pass Stimulus Measures

One of the critics described the budget, saying it is “Tax the rich; Spare the poor; Remember the young”

“Obama’s plan raises taxes on the richest households by $600 billion — not by raising rates, but instead reducing the deductions these families can take. Second, his plan adopts a new measure for inflation, which would slowly cut Social Security benefits, and it proposes additional cuts to Medicare. Most Republicans hate the first part. Most Democrats hate the second part.”

The biggest item by far is a plan to reduce the value of itemized deductions for top earners, so that they can only reduce their tax liability to 28 percent of income. This would affect deductions for charity, mortgage interest and other expenses — as well as other select preferences for the top 3 percent of families. The change is projected to bring in $529.3 billion over 10 years.

The plan would implement the so-called “Buffett Rule,” the tax change named after Warren Buffett that Obama has long sought. The change would require that “wealthy millionaires” pay at least 30 percent of their income — after charity — in taxes. The White House estimates this would bring in $53.4 billion.

The budget would set aside

• $113 million for the Department of Commerce to provide targeted financial aid to specific manufacturing communities
• $25 million to launch industry-specific Manufacturing Technology Acceleration Centers
• $200 million for “innovation-spurring transportation investments” that showed “resilience to extreme weather and other impacts of climate change.”
• $1 billion for the Next Generation Air Transportation System
• $150 million for a Workforce Innovation Fund
• $25 million to support “efforts to improve employment outcomes for older Americans.”
• $200 million performance reward for state governments that best cut energy waste and modernize their electricity grids
• $10 billion proposal for school reconstruction bonds

On Taxes:

• increase the Child and Dependent Care Tax Credit available to families with incomes between $15,000 and $103,000
• make permanent the tax credits for the production of renewable electricity and for hiring veterans
• adjust rules to make it easier for global pension funds to make infrastructure investments in the United States.

“He views it as a fiscally responsible plan for middle-class jobs and growth,” a senior administration official, who insisted on speaking on condition of anonymity, told reporters on Tuesday. “What the budget helps to do is break the false choice between deficits and job creation.”