Obama Budget: Higher Taxes, Healthcare, and a Deficit Mystery

President Barack Obama presented his budget plan to Congress today. CNN reports on the Obama budget:

One high-profile proposal involves closing the loophole that has allowed some Wall Street investment managers to pay lower tax rates than their low-paid assistants. Wall Street lobbyists have fought such changes in the past and won, but the current political environment is so sour on financial executives that the proposal could garner more support now.

On agriculture, the Obama administration is aiming to save $9.8 billion over 10 years by phasing out direct payments to farmers with sales revenues of $500,000 or more per year. On education, the administration is considering elimination of the Federal Mentoring Program created by the previous Bush administration to save nearly $50 million. On defense, the administration’s list suggests it will target expensive weapons systems but does not specify which programs will be cut or how much money will be saved.

The list did contend the Pentagon’s new weapons programs are “among the largest, most expensive, and technically difficult that the Department has ever tried to develop. Consequently, they carry a high risk of performance failure, cost increases and schedule delays.”

Obama is also proposing a $634 billion health care “reserve fund” aimed at reforming the system, according to senior administration officials. In order to fund it, Obama will ask wealthy Americans to deal with a tax increase and wealthy seniors to pay higher Medicare premiums.

Obama is pretty much acting as expected here. The only confusing facet is his concurrent plan to halve the deficit by 2013. Why the tight timeline? I’d like to hear an explanation of a) why it’s necessary to act on the deficit so quickly, and b) how, exactly, he plans on reducing it.

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  1. Dan D's Gravatar Comment by Dan D on February 26th, 2009 at 5:40 pm

    If the $634 Billion is any indication of Obama’s health care plan, Obama is planning a radical change in the health care system. The plan has not yet been laid out and already Obama is earmarking more than half a trillion for it and explaining that it will just be the beginning of what will be necessary.

    One of the reasons that health care seems to be so expensive (among many others) is the cost of research and development in order to procure new treatments and drugs.

    At the moment the health care industry has a significant incentive to pour money into research and development because of the possibility of making money. What will happen when this incentive is marginalized when the government has taken over the health care system? Will our advancements slow down or even cease?

    http://www.weeklypoint.com/2009/02/26/obama-budget-plans-634-billion-down-payment-for-health-care-reform/

  2. Matt Stigall's Gravatar Comment by Matt Stigall on February 27th, 2009 at 3:05 pm

    I believe that Obama’s point about halving the deficit is in regards to the yearly deficit not the overall deficit.

  3. Christian's Gravatar Comment by Christian on February 28th, 2009 at 10:27 pm

    I’m convinced, until someone can convince me otherwise of course, that when we’re in debt, spending even more money is not what we need to be doing. Saying you’ll raise taxes on rich people is a moot point; it will prove to accomplish very little debt wise. Cutting government spending is essential. Obama doesn’t seem to have that in his vocabulary. People are losing jobs and homes, and the government sees this as it’s queue to expand and spend even more.

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