In line with the ambitious agenda set out in his recent State of the Union address, President Barack Obama has sent to the US Congress a $4 trillion Budget that raises taxes on wealthy Americans and corporations to help struggling middle class families.Unveiling an elaborate $478 billion public works programme to beef up America’s infrastructure and create jobs in a big way for the next fiscal year, beginning October 1, Obama has proposed a one-time 14 per cent tax on the foreign profits kept overseas by US corporations.
As much as about $2 trillion is estimated to be kept by these corporations in stockpiled offshore profits in order to avoid the US taxes, and the Obama measure, if it goes through, could generate as much as $238 billion.Obama’s proposals, both on big spending and tax hikes, are set to face stiff resistance from the Republicans, who now control both Houses of Congress. Some of the proposals are already being termed “dead on arrival”.
In anticipation of the Republican opposition, Obama said in an interview with NBC, “My job is to present the right ideas, and if Republicans think they have a better idea then they should present them.” “This country’s better off than it was four years ago, but what we also know is that wages and incomes for middle class families are just now ticking up. They haven’t been keeping pace over the last 30 years compared to, you know, corporate profits and what’s happening to folks in the very top,” he said, making the pitch for tax benefits for the middle class.
In what has been termed a major push to reduce income inequality, Obama’s tax credits for middle class Americans will benefit 44 million households which, on an average, will see a tax cut of $600. The Obama budget that proposes a 7 per cent rise in the US domestic and military spending by easing the sequestration constraints imposed in 2011 also moots a 1.3 per cent pay raise for federal employees and troops.
In a prelude to the Republican line of resistance, former vice-presidential nominee and chairman of House Ways and Means Committee Paul Ryan commented, “This top down redistribution (by Obama) doesn’t work.” “What I think the president is trying to do here is to, again, exploit envy economics,” Ryan said, even while maintaining that he would be willing to work with the Obama administration “to see if we can find common ground on certain aspects of tax reform”.