WASHINGTON (Reuters) - President Barack Obama on Monday is scheduled to submit to Congress his fiscal 2013 budget proposal, which attempts to chart a fiscal path for the next 10 years.
Presidents’ budget blueprints often are ignored by Congress and this year, Republicans in the House of Representatives are expected to criticize spending proposals in this Democratic initiative, especially with the two political parties gearing up for the November elections.
Even if they end up being ignored by Congress, major elements of Obama’s newest budget proposal likely will be debated throughout this year and possibly into next year, depending on the outcome of the November 6 presidential and congressional elections.
Here are some highlights of Obama’s budget, as outlined on Friday by senior administration officials:
The U.S. budget deficit is expected to dip to $901 billion in fiscal 2013, which starts on October 1, down from a projected $1.33 trillion this year.
Obama’s budget adheres to a deficit-reduction law enacted in August, which places caps on many domestic programs in order to reduce spending by nearly $1 trillion over 10 years.
The White House projects that under the Obama budget, discretionary spending (money for programs that get renewed annually) would fall from 8.7 percent of Gross Domestic Product in 2011 to 5 percent in 2022.
A total of $4 trillion in spending cuts are included in the budget plan so that deficits fall to 2.8 percent of the economy in 2018, down from 8.5 percent forecast for this year.
Obama is again proposing to raise taxes on the wealthy. For households making more than $1 million a year, a minimum 30 percent tax rate would be instituted. This is known as the “Buffett Rule,” named after billionaire Warren Buffett, who says he should not enjoy a lower tax rate than his secretary.
Republicans in Congress have opposed raising tax rates on any income group.
The Obama budget also would let the 2001 and 2003 tax cuts ushered in by then-President George W. Bush expire for the highest earners. It also would eliminate some tax breaks for the wealthy. But no details have been released yet.
On corporate taxes, an administration official said that an initiative to lower the rate will be unveiled later this month. The current top corporate tax rate of 35 percent is expected to be lowered to the high 20s under a plan the White House is weighing.
The White House said that for every $1 in new revenue the Obama budget would raise from those making more than $250,000 a year and from closing corporate “loopholes,” his plan would cut $2.50 in spending, including the deficit-reduction steps enacted last year.
Last September, Obama unveiled a $447 billion job creation plan that Republicans in Congress have blocked. His budget outlines more than $350 billion in short-term job growth steps, which incorporates many of the ideas he floated in September.
This includes $50 billion in spending to improve roads, rails and airport runways “to create thousands” of jobs, according to a White House preview. Surface transportation funding over six years would be $476 billion and would be paid for through existing fees and savings from winding down the wars in Iraq and Afghanistan.
Another $60 billion would be dedicated to modernizing schools and helping states hire teachers and emergency workers.
A small business tax credit would be aimed at firms that hire new employees.
Obama’s budget will call for more than $360 billion in savings over 10 years to Medicare and Medicaid healthcare programs for the elderly and poor, as well as other healthcare programs. Another $278 billion would be cut from programs including farm subsidies and federal employees’ pensions.
Department of Defense spending, not including war funding, would be $487 billion over 10 years below the amount envisioned in the 2012 budget. The overall defense budget, including funds for the wars in Iraq and Afghanistan, would be 5 percent below the level enacted this year.
A senior administration official also said that about $600 billion in automatic spending cuts for the military that are set to trigger in early 2013 would be replaced by a “balanced deficit-reduction package.”
Reporting By Richard Cowan; Editing by Stacey Joyce