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President Barack Obama speaks about the "Community College to Career Fund" and his 2013 budget, Monday, Feb. 13, 2012, at Northern Virginia Community College in Annandale, Va. (Susan Walsh/Susan Walsh/AP)
President Barack Obama speaks about the "Community College to Career Fund" and his 2013 budget, Monday, Feb. 13, 2012, at Northern Virginia Community College in Annandale, Va. (Susan Walsh/Susan Walsh/AP)

Obama's plan to tax rich, give to poor Add to ...

So much for the post-partisan President.

Barack Obama on Monday solidified a steady, pre-election return to the core values of his Democratic Party, releasing a budget proposal that accepts yet another $1-trillion deficit and increases taxes on the wealthy to pay for job-creation programs.

The $3.8-trillion spending plan is more a campaign document than economic blueprint, since Republicans in Congress have made it clear they will oppose any significant policy put forward by the White House ahead of the Nov. 6 presidential election. As such, Mr. Obama’s budget is mainly useful for gaining insight on his re-election strategy and, perhaps, the kinds of programs he would put in place a year from now should he retain his job.

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Gone is the candidate who promised in 2008 to rise above the bitterness that paralyzed Washington during George W. Bush's second term. This budget is aimed at the Democrats who accused him of caving when he agreed to extend Mr. Bush's tax cuts for the wealthy in 2010, and is a statement that his party can trust him to protect their core beliefs if they rally to help him win a second term.

Mr. Obama will fight as an unabashed liberal to retain the White House, promising to increase the taxes of the rich, the banks and the oil companies, while using much of the revenue to pay for job-creation programs, education initiatives, and rebuilding roads and bridges.

“We can’t cut back on those things that are important for us to grow,” Mr. Obama told an audience of college students in Northern Virginia Monday. “We can’t just cut our way into growth. We can cut back on the things that we don’t need, but we also have to make sure that everyone is paying their fair share for the things that we do need.”

The administration is refusing to buy into the age of the austerity, placing a clear marker between Mr. Obama and Republicans, who have sought to characterize the U.S.’s rising debt burden as a national emergency.

Mr. Obama pays heed to the budget deficit, and proposes some spending cuts that he said he wished he didn’t have to make. Over the next decade, the White House says its program would shrink the budget deficit to 2.8 per cent of gross domestic product from the current 8.7 per cent of GDP, a $4-trillion reduction that relies heavily on ending the wars in Afghanistan and Iraq.

But Mr. Obama’s immediate strategy for the budget shortfall is containment rather that curtailment. The administration’s budget proposal fails to keep a 2009 promise by the President to halve the budget deficit by the end of his first term.

Instead, the shortfall will exceed $1-trillion (US) for a fourth consecutive year in 2012 – $1.32-trillion this year, marginally greater than in 2011 – and will drop to only $900-billion in 2013, according to the administration’s projections. The public debt will climb to $19.5-trillion in 2022, or 76.5 per cent of the gross domestic product, from $10-trillion currently.

Predictably, Republicans panned Mr. Obama’s budget plan. It “changes the debt course virtually none at all,” Alabama’s Jeff Sessions, the ranking Republican on the Senate budget committee, said on Bloomberg Television. “It does not confront the fundamental issues our country is facing.”

Many of Mr. Obama’s budget initiatives are echoes of previous ideas that failed to win bi-partisan support in Congress. The administration would decline to renew Bush-era tax cuts for households making more than $250,000 a year and ensure millionaires pay a minimum rate of 30 per cent. The top individual rate would rise to 39.6 per cent in 2013 from 35 per cent currently. The sum of the budget’s tax measures would raise $1.4-trillion from top earners over the next decade.

Mr. Obama would plow some $800-billion in infrastructure projects that the White House says would create thousands of jobs for construction workers stranded by the recession. The president also proposed an $8-billion fund to boost enrolment in vocational programs in high school and community colleges that officials said could train two million people for skilled jobs in technology and health industries that are going unfilled.

“The budget is a statement, quite clearly, of where he wants to take the budget in 2013,” said Robert Shapiro, chairman of Sonecon, a Washington-based consultancy, and senior economic official in Bill Clinton’s administration. “He is saying, ‘Make a choice.’ ”

That choice will most likely be made in November, and not before.

Unlike last year, lawmakers on both sides have given up pretending that Congress is capable of achieving anything significant until after the election.

Congress retains the Constitution’s spending authority and is under no obligation to take heed of the White House’s budget requests. It has yet to approve a budget for the current fiscal year because the Democratic-controlled Senate and the Republican-controlled House of Representatives can’t agree on a common program.

“It doesn’t feel like this is a serious budget document,” said Matt McDonald, a partner at Hamilton Place Strategies, an advisory firm in Washington, and a former staffer in George W. Bush’s White House. “Washington has internalized that it is going to take an election to hash through the issues that we are facing.”

Follow on Twitter: @CarmichaelKevin

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