Obama budget sees $1.3T deficit for 2012

Government Printing Office employees Clark Hopkin, left, and Sam Simm, ready copies of President Barack Obama's fiscal 2013 federal budget books, Thursday, Feb. 9, 2012, at the GPO in Washington.

Πηγή: dailycamera
By Andrew Taylor (AP)

Feb 10 2012

WASHINGTON -- President Barack Obama's new budget predicts a $1.3 trillion deficit for the ongoing fiscal year but that would drop to $575 billion in 2018 if the president gets his wish to raise taxes and if policymakers can live within tight restraints on the Pentagon and other Cabinet agency budgets, the White House said Friday.

After four consecutive years of trillion dollar-plus deficits, next year's budget shortfall would drop to $901 billion under the administration's tax and spending policies.

In his budget submission on Monday, the president will also call for a "Buffett Rule" -- that would guarantee that households making more than $1 million a year pay at least 30 percent of their income in taxes. Billionaire financier Warren Buffett has made headlines proposing the idea, saying that it's unfair for him to pay a lower tax rate than his secretary.

Obama will also call for Congress to enact a tax reform plan that would raise about $1.5 trillion over the coming decade by eliminating numerous tax preferences and assuming revenues from the expiration of Bush-era tax cuts for people in the upper brackets. The president is also going to call for lower corporate tax rates as well as an end to many corporate tax loopholes; details will come later in the month.

The election-year document is sure to get a brushoff from Republicans controlling the House. The White House says that Monday's budget will contain many items from a September submission to a failed congressional deficit "supercommittee," which deadlocked over tax increases and how much to cut popular benefit programs like Medicare.

The Obama budget will also reflect tight "caps" on agency operating budgets forged in last summer's budget and debt limit pact between Obama and House Speaker John Boehner. Those include a $6 billion cut in the budget for core Pentagon operations and cuts to many domestic agencies as well.

But it's commonly assumed that presidential politics will prevent Democrats and Republicans from renewing efforts for a broader budget agreement, though negotiations on Capitol Hill are under way in efforts to renew jobless benefits for the long-term unemployed and a 2 percentage point cut in payroll taxes and prevent a 27 percent cut in Medicare payments to doctors that's the product of an outdated funding formula.

Administration officials briefed reporters and issued a fact sheet after several figures were reported in The Wall St. Journal, which viewed leaked draft budget documents.

White House talking points said the budget will put "the nation on a path to live within our means -- by cutting wasteful spending, asking all Americans to shoulder their fair share and making tough choices on some things we cannot afford, while keeping the investments we need to grow the economy and create jobs."

The president will also propose a six-year, $476 billion highway and surface transportation bill and $360 billion from curbs to federal health care programs like Medicare and Medicaid. There's $278 billion more in savings from non-health benefits programs like farm subsidies and federal civilian worker pensions.

There's also an immediate $350 billion for job-creating measures, about $100 billion less than presented in Obama's September jobs plan because the administration is giving up on increasing the 2 percentage point payroll tax cut to 3.1 percent and giving it to businesses.

EU demands right to dictate national budgets

Πηγή: EUbusiness
Nov 24 2011

(BRUSSELS) - The European Union demanded Wednesday sweeping powers to override national budgets and proposed issuing joint eurozone bonds to help resolve and prevent a repeat of the debt crisis.

"Without stronger governance, it will be difficult if not impossible to sustain the common currency," EU Commission chief Jose Manuel Barroso said of his latest legislative proposals.

The head of the executive EU arm, Barroso presented radical plans that would allow him and Economy Commissioner Olli Rehn to decide to intervene in national policymaking.

Each said such new powers were a pre-condition for pooling eurozone government bonds, presented as a future safeguard.

Chancellor Angela Merkel immediately repeated Germany's opposition to joint eurozone bonds, saying the approach would not work -- just as investors shunned an issue of German 10-year bonds, considered the eurozone gold standard.

French President Nicolas Sarkozy voiced the conviction, which he said Merkel shared, that the 17 eurozone nations must "better integrate and that at the heart of that integration France and Germany must grow closer and be the base of stability in the eurozone and Europe in general."

"There is no other choice," he stressed.

Such closer integration would mean no over-reaching national budgets and no "fiscal dumping".

Countries with excessive budget deficits must make efforts to bring them down, he added, addressing a meeting of French mayors in Paris.

However the Netherlands, which backs stronger budget policing, meanwhile warned that plans for fiscal convergence also face an "uphill struggle."

Without naming the objectors, Finance Minister Jan Kees De Jager said: "There are those who resist further discipline."

The proposals, which concern only the eurozone at this stage, must now journey through the EU's 27 member states and the European Parliament.

Barroso argued that to complement democracy at the level of national parliaments, for instance in the setting of annual budgets, a "democracy of the EU" also had to be given its say.

Otherwise, he said, Europe would "hand sovereignty to markets."

The EU has rules on annual deficits and cumulative debts but these have been trampled over for years by its governments.

This time, the Commission wants the power to send inspectors in to finance ministries around Europe, and demand changes it believes better meet the needs of the common good before funds are legally allocated.

Now the Commission wants states to set up independent councils using external forecasting to agree on spending, taxation and other budget-shaping reforms.

The EU wants to institutionalise audits of troubled nations -- like the missions in Greece or Italy -- before bailouts become necessary.

Rehn said the right to intervene in a eurozone state's public finances would be awarded when the Commission and the European Central Bank (ECB) determine that financial stability is at risk.

Germany wants to go further and empower the European Court of Justice to pursue the worst offenders.

However Germany is staunchly against jointly-guaranteed eurozone bonds, believing they are not the answer to the eurozone debt crisis either in the short or long-term. Finland and the Netherlands also came out against eurobonds.

Merkel said she found it "extremely worrying" and "inappropriate" that the Commission was pressing ahead with eurobonds proposals, underlining: "This will not work."

German Finance Minister Wolfgang Schaeuble said "we won't take that path."

As Europe's biggest economy, Germany would be liable for the lion's share of pooled borrowings, and would see its ultra-low borrowing costs rise.

While Germany has been largely insulated from the difficulties weaker eurozone countries have had in raising funds, on Wednesday it had a shock when it was able to place only 3.6 billion euros' ($4.8 billion) worth of its benchmark 10-year "Bund" from a total of 6.0 billion euros on offer.

The borrowing rate remained low, but Austria's central bank head and European Central Bank (ECB) governing council member Ewald Nowotny called it an "alarm signal".

Germany and France have also sparred over recent days over having the ECB become a lender of last resort in order to resolve the debt crisis.

EU leaders are expected to debate the legislative package and related ideas at an early-December summit.