Some highlights of Obama's 2016 spending plan
The Associated Press
Feb. 03, 2015
Highlights of proposals in the $4 trillion budget for 2016 that President Barack Obama sent to Congress on Monday:
—Spending of $4.0 trillion and receipts of $3.5 trillion would combine for a $474 trillion deficit. For the budget year that ended Sept. 30, the actual deficit was $483 billion. That was a marked improvement from the $1 trillion-plus deficits during Obama's first years in office, when the country was struggling to emerge from a deep recession.
—The budget offers new funding for preschool programs for low- and moderate-income families and two years of free community college for students from families earning up to $200,000.
—A six-year, $478 billion public works program would pay for highway, bridge and transit upgrades. About $238 billion would come from a one-time, 14 percent mandatory tax on the up to $2 trillion in estimated U.S. corporate earnings that have accumulated overseas. That rate is significantly lower than the current top corporate rate of 35 percent. The top corporate rate for U.S. earnings would drop to 28 percent; foreign profits would be taxed at 19 percent, with companies getting a credit for foreign taxes paid. The remaining $240 billion would come from the federal Highway Trust Fund, which is financed with a gasoline tax.
—The capital gains rate on couples making more than $500,000 per year would increase from 24.2 percent to 28 percent. Obama wants to require estates to pay capital gains taxes on securities at the time they are inherited. He is trying to impose a 0.07 percent fee on the roughly 100 U.S. financial companies with assets of more than $50 billion.
—Obama would take the $320 billion that those tax increases would generate over 10 years and funnel them into low- and middle-class tax breaks. His ideas: a credit of up to $500 for two-income families, a boost in the child care tax credit to up to $3,000 for each of up to two children under age 5, and overhauling breaks that help pay for college.
—All told, tax increases would total $1.5 trillion over 10 years, including a hike on a pack of cigarettes from $1.01 to $1.95 per pack.
—The budget claims $1.8 trillion in deficit reduction, but takes liberties such as ignoring the cost of replacing Medicare cuts to doctors' fees and the cost of renewing refundable tax cuts to low-income workers and families with children.
—Painful, automatic cuts to the Pentagon and domestic agencies would be eased, with a 7 percent increase in annual appropriations. For 2016, Obama wants a $38 billion increase for the Pentagon. All told, agency budgets would go up $362 billion over the next six years above caps mandated by automatic spending cuts.
—The budget offers large increases for veterans programs, the Secret Service and cybersecurity.