Obama's Budget: Change We Can Believe In
February 27, 2009
President Obama submitted to Congress the outline of his federal budget for fiscal year 2010, which the House and Senate will consider in the coming weeks. This is the new president's first budget proposal, and it is a 180-degree turn from the past eight years. It’s aimed at rebuilding the middle class, reforming the nation’s health care system and helping working families educate their children, while asking the nation’s wealthiest to begin paying more of their fair share and ending tax breaks for corporations that ship U.S. jobs overseas.
The budget is a non-binding blueprint of expected policy and funding changes that will guide spending decisions for the fiscal year beginning on October 1. A version with more specific program-by-program funding levels is expected later in the spring. The budget's cornerstone is Obama’s plan to “transform and modernize the health care system.”
The budget calls for setting aside a reserve fund of $634 billion over 10 years that will be dedicated to financing first steps towards achieving health care reforms. Funding comes from raising taxes on the wealthy, closing corporate tax loopholes and changes to federal programs. Program changes include AFSCME-advocated proposals to restore fiscal integrity to Medicare by reducing private Medicare Advantage plans by $175 billion over ten years. The President’s proposal would also save the federal government and states money by increasing the prescription drug rebates paid to Medicaid by drug manufacturers.
The budget also includes proposals to increase the availability of generic drugs, including biologic generics. On the tax side, the budget calls for making permanent the $800 (for joint filers; $400 for single) “Making Work Pay” tax cut for 95 percent of America’s working families while preserving all dedicated payroll taxes that fund Social Security and Medicare; continuing to cut taxes for families through an expansion of the Child Tax Credit; and making the $2,500 American Opportunity Tax Credit permanent to help kids afford college. The Obama budget plan will also leave in place recent tax breaks for middle-income earners, but let expire the 2001 and 2003 Bush tax cuts for taxpayers making more than $250,000 annually, fulfilling his campaign promise.
He is also committed to making saving for retirement easier as the economy recovers by laying the groundwork for the establishment of automatic workplace pensions on top of and outside of Social Security. Another major theme is a call for fiscal responsibility and honest budgeting through cutting the deficit by at least half over the next four years. At the same time, the budget calls for new investments in clean energy, education, infrastructure, as well as national security and veterans programs. In addition, the budget includes new investments in early childhood education, doubling funding for the Early Head Start program, expanding Head Start, and beginning a major new effort to ramp up the Nurse-Home Visitation program.
The President’s budget also calls for upgrading critical infrastructure through a new federal commitment to high-speed rail, including a $1 billion per year high-speed rail state grant program; enhanced security at over 90 major ports; improvements in homeland security; and investment in clean and safe drinking water with programs to fund over 1,000 clean water and nearly 700 drinking water projects annually. And the Center for American Progress noted that the budget stands apart for its integrity:
It lays it all out there: the size of the deficit, the cost of the war, the cost of tax reductions, the details of tax increases, the state of the economy. It’s all there for everyone to see without deceit. It’s sad that such honesty is novel, but it is, and it’s welcome.
Now that's change we can believe in – and change that will get our country working again for working families. A detailed look at the budget is available from the Office of Management and Budget.
