February, 26 2009, 02:09pm EDT
For Immediate Release
Contact:
Michelle Bazie,202-408-1080,bazie@cbpp.org
Statement by Robert Greenstein, Executive Director, on The President's 2010 Budget Proposal
WASHINGTON
The President's budget represents a bold and
courageous proposal to make progress in restoring fiscal discipline while
addressing two central problems of our time - a broken health care system and
the threat of catastrophic global warming - and other national needs.
Particularly courageous are several proposals that take on vested interests to
fully pay for the costs of health care reform and tackling global warming,
including:
- Instituting major cost-saving reforms in Medicare that also hold promise for
slowing private-sector health care costs and are consistent with
recommendations of Congress' expert advisory body, the Medicare Payment
Advisory Commission. Faced with intense opposition from insurance companies
and other interests, Congress has shied away from such proposals, but the new
Administration has embraced them. The budget also includes a sound,
longstanding Republican proposal - to increase the premiums that affluent
Medicare beneficiaries pay for the prescription drug benefit that Medicare
provides them.
- Limiting various tax subsidies to the most affluent Americans to 28 cents on
the dollar. Currently, middle-income Americans receive a tax subsidy equal to
10 cents or 15 cents for each dollar of their deductible expenses (if they
itemize deductions at all), while affluent Americans get a subsidy of 35 cents
for each dollar of the same expenses. The budget would cap the subsidy at 28
cents on the dollar for those with incomes over $250,000, the same rate at
which those expenses could be deducted in the final Reagan years, when the top
tax rates were lower. As a result, incentives to incur those expenses would be
the same as under President Reagan.
- Auctioning all emissions permits under the Administration's proposed
cap-and-trade system to address global warming, rather than conferring
windfall profits on energy companies and others that pollute by giving them
tens of billions of dollars' worth of permits for free. The proposal would
then use auction proceeds to offset the impact on working families of the
resulting increases in energy prices, by extending the Making Work Pay tax
cut. (This tax cut is similar to tax-reduction proposals of recent years by a
number of analysts, including those here at CBPP, to efficiently provide
middle-income consumers with relief from the increased energy costs that an
emissions cap would trigger.) Additional measures will be required to provide
adequate relief to low-income consumers; the budget envisions using some of
the remaining auction proceeds for that.
The budget also makes a significant commitment to restoring fiscal
responsibility while meeting high priority national needs, by:
- Reducing deficits to 3 percent of the Gross Domestic Product by 2013, about
the level needed to keep the federal debt from rising much faster than the
economy and thus leading to an explosion of debt that swamps the budget and
the economy.
- Pledging to offset the costs over the next ten years of health care reforms
that initially will raise costs by providing universal coverage but that will
set the stage for reducing public- and private-sector health care costs in
subsequent decades by gradually slowing the rate at which those costs grow.
The high rate of growth of health-care costs is at the root of the nation's
long-term fiscal problem.
By themselves, these budget proposals would prove insufficient to keep
deficits at 3 percent of GDP indefinitely. Policymakers will need to take
additional steps in subsequent years, as President Obama noted at his "fiscal
summit" on Monday.
The budget also deserves high marks for transparency and honesty. Gone are the
gimmicks that have been an annual feature of both Presidential and
Congressional budgets, under which policymakers pretended to reduce deficits
markedly over time by omitting costs in the "out years" for operations in Iraq
and Afghanistan, natural disasters, and continued relief from the Alternative
Minimum Tax and the scheduled reductions in Medicare fees for doctors - and by
printing in the budget numbers for the costs of discretionary programs in the
out years that everyone knew were unrealistically low.
Those gimmicks, sleights-of-hand, and convenient omissions are absent from
this budget. Its greater realism and transparency makes the President's pledge
to cut the deficit in half in four years a meaningful one; we will now know
each year whether we are on course to meet that goal.
The budget also provides needed investments in key areas for long-term
economic growth, such as energy efficiency and early childhood education. And
it proposes savings from lower priority programs such as bloated agricultural
subsidies and from unwarranted tax breaks, such as one that millionaire equity
fund managers have exploited to pay taxes at lower rates than many
middle-income families and others that benefit oil companies. The budget also
follows in the tradition of the 1990 and 1993 deficit-reduction laws in both
shrinking the deficit and reducing poverty, which is higher in the United
States than in other Western nations.
Predictable but Unfounded Criticisms
The budget already is facing several lines of attack that rest on inaccurate
or misleading charges. Chief among them is the claim that the tax increases
for people who make over $250,000 will seriously injure small businesses.
In fact, small businesses would win under this budget. Tax Policy Center data
show that only 3 percent of people with small business income have incomes
over $250,000, the only group that faces higher taxes under this budget. The
vast majority of small business owners are middle-income individuals who would
receive tax cuts under the budget; many of them would also benefit from its
universal coverage and health care cost containment reforms.
To be sure, many will oppose various proposals to close tax loopholes, the
Medicare and agricultural subsidy reforms, and the cap on itemized deductions
for the most affluent Americans - while saying that they, too, favor universal
health coverage, curbing global warming, improvements in education, and the
like. This budget challenges them to propose their own ways to finance such
measures.
The Center on Budget and Policy Priorities is one of the nation's premier policy organizations working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals.
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The news came as the U.S. House of Representatives voted on Saturday to send another $26 billion to Israel, including for military aid.
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Muhammad Shehada, the communications chief for Euro-Med Human Rights Monitor, expressed shock that there was not more media coverage of the Nasser grave.
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Nearly 40 House Democrats voted against a measure to send around $26 billion more to Israel as it continues its war on Gaza that human rights experts have deemed a genocide.
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"Despite the weapons aid package passing, this is the largest number of Democratic lawmakers to vote against unrestricted weapons aid for Israel in recent memory," senior Democratic strategist Waleed Shahid observed on social media.
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Human rights lawyer, lobbyist, and former Democratic National Committee committeewoman Yasmine Taeb posted that it was "incredibly significant that 37 Democrats voted NO and rejected AIPAC's role and influence in the party."
Senior Democrats who opposed the funding included Reps. Jamie Raskin (D-Md.), Maxine Waters (D-Calif.), Lloyd Doggett (D-Texas), Bennie Thompson (D-Miss.), Jim McGovern (D-Mass.), and Bonnie Watson Coleman (D-N.J.)
The bill earmarks around $4 billion for Israel's missile defense systems and more than $9 billion for humanitarian aid to Gaza, according toThe Associated Press. However, while lawmakers approved of individual expenditures, they balked at giving more unconditional military aid to the far-right government of Israeli Prime Minister Benjamin Netanyahu.
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Mark Pocan (D-Wis.), who also voted no, said that he "could not in good conscience vote for more offensive weapons to be given to Israel to be used in Gaza without any conditions attached."
Pocan further called the "devastation inflicted upon innocent civilians in Gaza" "unjustifiable" and argued that "further arming Netanyahu and his extreme coalition could only lead us to a wider conflict in the Middle East."
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"This is a grave abdication of U.S. humanitarian obligations," Lee said. "It is simply nonsensical to provide badly needed humanitarian assistance while simultaneously funding weapons that will be used to make the humanitarian crisis in Gaza worse."
She added, "The United States taxpayers should not be funding unconditional military weapons to a conflict that has created a catastrophic humanitarian disaster."
The bill sending funds to Israel was only one of several measures passed on Saturday as part of a $95 billion foreign spending package that will also provide a long-delayed approximately $61 billion for Ukraine in its war with Russia and around $8 billion to counter China in the Indian and Pacific oceans. Among the bills passed Saturday was one banning popular social media app TikTok in the U.S. if the Chinese company that owns it refuses to sell, theAP reported further.
The package will now go to the U.S. Senate, which could pass it as early as Tuesday. President Joe Biden has promised to sign the measures as soon as he receives them.
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