Today, President Barack Obama sent his budget up to Congress. Below are some of the highlights from his budget. The President's budget builds on his message of middle class investment that he delivered in his State of the Union.
The President's budget proposes a six-year transportation bill with a $478 billion price tag. This proposal represents an increase over the President's proposal in last year's budget, which was $302 billion over four-years.
The President's transportation initiatives are paid for - in part - from a $238 billion infusion of money from the taxation of repatriated corporate profits currently held overseas. The President proposes a 14 percent tax on previously held overseas corporate profits once they are repatriated, and the plan also calls for a minimum 19 percent tax on all future corporate profits repatriated.
The President's budget includes $1.25 billion (per year) for the TIGER grant program wrapped into the Transportation Trust Fund (formerly known as the Highway Trust Fund), as well as $18 billion (over six years) for the freight infrastructure plan, and $144 billion (over six years) for the passenger rail infrastructure plan including capital improvements wrapped into the Transportation Trust Fund.
The President's budget would create a new $500 million grant program called FAST (Fixing and Accelerating Surface Transportation) for projects to compete for money.
It would also create two new bond programs to spur more private capital: America Fast Forward bonds and Qualified Public Infrastructure Bonds. The first would be modeled on the Build America Bonds program from the stimulus, and the second would be a tax-exempt form of municipal bonds modeled on existing Private Activity Bonds.
Increase in capital gains
To pay for many of his proposals, President Obama will make several changes to the tax code to increase revenue. His first order of business is to increase what the White House describes as the "porous capital-gains tax." Obama plans to increase the tax from 23.8 percent for top earners to 28 percent. The White House has tried to garner GOP support for the proposal by reminding congressional Republicans that was the rate President Reagan agreed to in a tax deal in 1986.
Investment in combatting climate change
President Obama has made climate change a significant second term priority. In this budget, the President makes the case for combatting climate change as an effort to prevent natural disasters. In his budget, the President has marked $7.4 billion to invest in clean-energy technology. Obama also proposes giving states more money to incentivize them to take action against carbon emissions. The President proposes spending money to help coastal communities plan for shifts in local ecosystems, and he wants to invest an additional $175 million in the Federal Emergency Management Agency's Pre-Disaster Mitigation Grant Program, as well as to continue spending on water-conservation programs. While the White House admits in its budget that "it cannot be said with certainty that any individual weather event is caused by climate change," it argues that the "costs of climate change add up." Over the past 10 years, the federal government says it has spent $300 billion on natural disasters from fires to drought.
The budget includes $400 billion in health savings that the administrations says, "builds on the Affordable Care Act to help maintain slower cost growth while improving health care quality – complementing the Administration’s other efforts on delivery system reform." The President's budget seeks to raise about $1 trillion in long-term savings and extending the Medicare Hospital Insurance trust fund solvency by approximately five years.
The budget provides resources to support the Global Health Security Agenda, increases funding to eradicate polio and other global health challenges, and creates a new Impact Fund for targeted global HIV/AIDS efforts. In addition, the Budget increases funding for domestic preparedness efforts to more effectively and efficiently respond to potential future outbreaks here at home. The Budget also makes investments to address the domestic HIV epidemic to help states develop HIV implementation plans to support the goals of the National HIV/AIDS Strategy.
The budget includes more than $100 million in new investments across HHS to reduce abuse of prescription opioids and heroin, which together take the lives of 20,000 Americans per year. These new resources will:
- Increase funding for every state to expand existing Prescription Drug Monitoring Programs;
- Expand and improve the treatment for people who abuse heroin and prescription opioids; and
- Support dissemination of naloxone, an opioid antagonist that reverses the effects of opioid overdose, by first responders in an effort to prevent overdose deaths in high risk communities.
The President's budget invests over $31 billion in the National Institutes of Health with the goal of awarding 10,000 new grants for possible discoveries and cures of our nation's most challenging diseases.
The President's America's College Promise proposal creates new federal-state partnerships to provide two years of free community college to responsible students, while promoting key reforms to improve the quality of community college offerings to ensure that they are a gateway to a career or four-year degree. If all states participate, an estimated 9 million students could benefit from this proposal.
The President's budget includes an initiative to help guarantee that Pell Grants keep pace with Inflation. Obama also hopes to help student loan borrowers manage their debt, capping student loan payments at 10 percent of monthly discretionary income.
President Obama is also looking to simplify, consolidate and expand higher education tax credits.
Ending sequestration level spending
The President's budget calls for an increase in federal spending. Obama's budget refers to the sequestration level spending as "mindless austerity." President Obama proposes to end the sequestration level spending.
For more information
Please feel to reach out to McDonald Hopkins Government Strategies for more information regarding the budget and how it may impact you and what you can do about it.