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President Barack Obama on Monday released his 2013 budget to Congress, which includes boosting taxes for higher income earners as well as allocating more funds to the Securities and Exchange Commission.
In comments during the unveiling of his budget proposal at Northern Virginia Community College in Annandale, Va., Obama said that because the nation’s economy “is growing stronger and the recovery is speeding up” the nation “can’t go back to the policies that got us into this mess.” Within the last seven months, he said, the nation has added 3.7 million new jobs.
The Treasury Department released the same day its Greenbook detailing how the president’s FY2013 budget proposes tax policy to boost growth, create jobs and improve opportunity for the middle class. In releasing the details, Treasury Secretary Timothy Geithner said the budget proposals “strike the balance between supporting growth and laying out a responsible, long-term deficit reduction plan that simplifies the tax code and asks the most fortunate to pay their fair share.”
For starters, Obama said, Congress must stop taxes from going up for 160 million middle class Americans by extending the payroll tax cuts by the end of this month. “Congress needs to pass an extension of the payroll tax cuts without delay and without linking [passage of such cuts] to ideological side issues,” he said.
Obama said his budget plan is a blueprint for keeping the economy growing and proposes to partially do this by reducing the deficit by $4 trillion by 2022 by making “tough choices.” Obama added during his Monday remarks that the nation “can’t just cut our way to growth” rather “we have to make sure that everyone is paying their fair share.”
Obama’s plan would renew the Bush tax cuts for families earning less than $250,000 per year, but allow them to expire for those earning more. As Obama said in his State of the Union speech in early February, “Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2% of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households.”
The budget also calls for $1.5 trillion in tax increases over 10 years, which published reports have said Obama will campaign on as a way to pay for measures that would strengthen the economy in the short term while reducing the federal budget deficit in the long term.
As for the estate tax, Obama’s budget says that the administration “remains opposed to the extension of these high-income tax cuts past 2012 and supports the return of the estate tax exemption and rates to 2009 levels.” This, Obama said, would reduce the deficit by $968 billion over 10 years.
The president’s budget would also increase the SEC’s budget level in 2013 to $1.566 billion, which is an 18.5% increase over the SEC’s 2012 appropriation. The SEC says the boost in funds would allow the agency to add 676 professionals next year, a 15% increase in the agency’s staffing level over 2012. The request would also allow the agency to support critical new technology initiatives, including surveillance and risk analysis tools, better electronic discovery tools, and continued build out of the agency’s system to track tips, complaints and referrals.
Across the agency the president’s request would support the following: 191 new staff would be added to the SEC’s enforcement division—a boost from 1,354 positions now to 1,545 in 2013; 222 new staff would be added to the Office of Compliance Inspections and Examinations (OCIE)—bringing the current number of 968 examiners to 1,190; another 110 staff would be added to regulatory divisions to focus on areas such as money market funds.
Former Sen. Pete Domenici, R-N.M., and former White House Budget Director Alice Rivlin, co-chairmen of the Bipartisan Policy Center’s Debt Reduction Task Force, said in a statement that while the deficit reduction approach outlined in the president’s budget “is a serious step forward, more is needed.”
Rivlin and Domenici said that while they “applaud the president’s willingness to begin addressing the major drivers of our debt, including the unsustainable growth of our health care entitlement programs and need for additional revenues,” and while Obama’s budget stabilizes debt over the next decade, “the real problem arrives thereafter, as entitlement costs spiral out of control and revenues are inadequate to deal with a wave of retiring baby boomers.”
But most Republicans such as Sen. Bob Corker, R-Tenn., are opposed to any tax increase. Corker said in a statement on Monday that with “the Senate having failed to pass a budget in over 1,000 days and our national debt having reached the size of the U.S. economy,” the president’s 2013 budget proposal “vastly overstates its claims of reducing future deficits and fails to seriously address the biggest challenge facing our country, namely out-of-control spending in Washington that is generating record deficits and debt and leading to the insolvency of Social Security and Medicare. Our country faces difficult decisions regarding our unsustainable and growing level of debt, and it is incumbent upon the president and the eventual Republican nominee to lay out a valid course of action to address them.”
Corker went on to say that “The best thing we can do to create jobs and foster economic growth is to embrace tax reform that does away with most if not all of the $1.2 trillion in loopholes each year, lowers everyone’s rate, and broadens the base; reform Social Security and Medicare so they are solvent for the long haul; and put in place a serious plan for long-term deficit reduction.”
Senate Finance Committee Chairman Max Baucus, D-Mont., plans to hold a hearing on Tuesday to review the president’s FY2013 budget, with Geithner set to testify. The hearing, titled “The President’s Budget for Fiscal Year 2013,” will probe Geithner on how the president’s proposals will continue to spur job creation, drive the economic recovery forward, work to cut the deficit and streamline the tax code.