The White House has touted a growing economy and shrinking deficits as the impetus for proposing a range of measures aimed at helping low- and middle-income families. These would be partially paid for by raising taxes on the rich, such as an increase on investment taxes and getting rid of what President Obama calls the “trust fund loophole” in the estate tax.
According to the White House, the budget would also install new taxes hitting U.S. corporations storing assets overseas and offer nearly $300 billion in tax cuts aimed at mainly the middle class.
On a conference call with reporters, senior administration officials said 44 million households would see an average tax cut of $600 apiece.
But officials acknowledged the budget is only a starting point in negotiations with Republican lawmakers who are already criticizing much of what the White House is proposing.
In an interview with NBC Sunday night, the President rejected the idea that many of the proposals don’t stand a chance in a Republican-controlled Congress.
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The CBO projects that the annual federal deficit for this fiscal year will be $468 billion, or 2.6% of U.S. gross domestic product (GDP). That number reflects the gap between how much the government spends and how much it takes in.
Solid economic growth over the next few years is projected, keeping the deficit at a very modest level until 2018.
But after that the CBO expects it to gradually grow to 4% by 2025 as spending on entitlement programs like Social Security, Medicare and health insurance subsidies — as well as interest on the country’s debt – are projected to grow faster than the GDP.
Senior administration officials say that their strategy has never been to erase the deficit all together but rather to keep it at a level that is manageable. The President’s budget projects a $474 billion deficit for 2016, or 2.5% of the GDP — which would remain stable as both the deficit and economy grow.
Getting the deficit to below 3% allows for “sustainable” fiscal policy while investing in economic growth, officials said, citing economists.
