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 |  Subject: $1T IN TAXES IS HELL TO PAY  Sat Feb 28, 2009 6:20 pm | |
| BAM'S MONSTER-SIZE BUDGET INFLICTS A DECADE OF PAIN
WASHINGTON - Big government is back - and so are big taxes.
President Obama unveiled a mammoth, $3.6 trillion budget yesterday that would dramatically boost federal spending almost across the board - and pay for it with tax hikes of $1 trillion on individuals and businesses over the next decade.
Experts immediately tagged the new president's supersized spending plan the most sweeping government overhaul since Lyndon Johnson's Great Society in the 1960s.
Marty Regalia, the chief economist at the US Chamber of Commerce, called it "the biggest return to the welfare state that we've seen in decades."
The budget would create an eye-popping $1.8 trillion deficit for the 2009 fiscal year - the highest ever in dollar terms - amounting to a 12.3 percent share of the economy, which is the largest since 1945.
The big budget - which Obama released two days after telling Congress the "day of reckoning" for past economic blunders had arrived - encompasses his key priorities, from a troop drawdown in Iraq to big new investments in health, science, and education.
Republicans immediately balked at the spending free-for-all.
House GOP leader John Boehner of Ohio said, "The era of big government is back, and Democrats are asking you to pay for it. We can't continue to pile debt on the backs of our kids and grandkids."
One provision that drew immediate fire is a tax increase on individuals in the top income bracket, in the form of decreased deductions for charity donations, interest on mortgages and state and local taxes.
Currently, if someone in the top bracket makes a gift to charity, for instance, they get a 35 percent write-off. Under Obama's plan, beginning in 2011, they would get a smaller write-off at the 28 percent rate - a change that worries charity groups.
Other major revenue-raisers include allowing George W. Bush's tax cuts to expire for families earning more than $250,000 a year, which would raise the highest rate from 35 percent to 39.6 percent. Obama would also impose a 20 percent capital-gains rate on top earners, up from the current 15 percent.
Together, the taxes on the wealthy would raise $635 billion over 10 years, with most of the funds going to tackle health care, which is sucking up an increasing share of the national budget and household finances. A slew of increased taxes on business would rake in nearly $350 billion.
Meanwhile, the budget forecasts a jump in government spending by 7 points - to 28 percent of the total economy this year.
"This is clearly the highest since World War II," said Stan Collender, a longtime congressional budget staffer who is now managing director at Qorvis Communications.
Dan Cook, senior market analyst with IG Markets in Chicago, said, "There are some good things in this budget but a lot still seems very wasteful. The market is crumbling around us and economies are in the tank."
Obama budget chief Peter Orszag said a $750 billion bailout fund included in the budget was just a "placeholder" in case the feds need more cash after the existing $700 billion rescue fund runs out. "We hope that it will not be necessary," he said.
Nor did he pledge that the $634 billion health-care fund would cover the entire cost of providing coverage to all Americans, which experts say could cost much more.
The administration also made some optimistic projections about the state of the economy - predicting that it would grow at a 3.2 percent rate in 2010 after shrinking by 1.2 percent this year.
Outside budget analysts say growth in the 2 percent range is more likely.
http://www.nypost.com/seven/02272009/news/politics/1t_in_taxes_is_hell_to_pay_157199.htm |
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