The 5 Big Asks in President Obama’s Aspirational, Unpassable, $4 Trillion Budget
By Jeremy Scott Diamond Richard Rubin Alex Tribou | February 2, 2015
Free of re-election concerns and constrained by a Republican congress that will try to block him at every turn, President Obama released an ambitious 2016 budget on Monday that's more about what he would do than what he can do.
Revenue
28%

Take from the Rich

In previous budgets President Obama tried and failed to limit tax breaks for high earners, cap tax-advantaged retirement accounts, and pass the Buffett Rule, a minimum federal tax rate of 30 percent on the very wealthy. His new budget once again calls for all of these—and more: He would increase the top tax rate on capital gains to 28 percent from 23.8 percent, and appreciated assets passed on from one generation to the next would be subject to capital gains tax. The White House says these changes would bring in $208 billion over ten years.
Capital Gains Tax Rate
date,gainstax 2009,15 2010,15 2011,15 2012,15 2013,23.8 2014,23.8 2015,23.8 2016,28
SOURCE: Office of Management and Budget
Revenue
$248b

Make Big Business Pay

Obama’s budget proposes a minimum 19 percent tax on the future foreign earnings of U.S.-based companies, capturing profits that are now often beyond the government’s reach. It also seeks a one-time, 14 percent mandatory tax on about $2 trillion in profits stockpiled offshore, yielding $248 billion over five years to pay for roads, bridges, and other infrastructure projects. The budget calls for an end to tax breaks for oil companies, and aims to extract money from Wall Street banks and insurance by taxing the liabilities of the largest financial institutions $112 billion over 10 years.
Spending
$235b

Boost the Middle Class

The president would take some of the money gleaned from corporations and the wealthy and put it toward programs for middle-class and lower-income Americans. He proposes to spend about $235 billion over 10 years to expand tax credits for higher education, including a plan that would make community college free for many students; create a $500 tax credit for families with two working parents; and offer some parents child-care tax breaks of as much as $3,000 a year.
Spending
7%

Stop Worrying About Deficits

With the economy rebounding, the deficit fell to 2.8 percent of gross national product in 2014. (It was 9.8 percent of GDP in 2009.) Obama's budget declares the age of austerity over and calls for an end to the automatic, across-the board federal spending caps, known as sequestration, that have been in place since 2013. The White House is asking for $74 billion in additional discretionary spending, about 7 percent above what’s allowed under the caps. After falling from a post 2008-recession-peak, Obama's budget projects the deficit, which was $485 billion in 2014, to inch back up to about $550 billion by 2020.
Deficit
date,Deficit 2006,0.25 2007,0.16 2008,0.46 2009,1.41 2010,1.29 2011,1.3 2012,1.09 2013,0.68 2014,0.48 2015,0.58 2016,0.47 2017,0.46 2018,0.48 2019,0.52 2020,0.55
SOURCE: Office of Management and Budget
Spending
$534b

Bankroll the Pentagon

Republicans are already saying they’ll fight the president’s new taxes and spending proposals. But maybe not this: Obama wants $534 billion in additional money for the Department of Defense—about $36 billion more than sequestration would allow. That would rise to $570 billion in 2020. The budget also calls for $51 billion in additional war spending, including $5.3 billion to fight Islamic State extremists.
Defense Department Budget Authority
date,Department of Defense 2006,411 2007,431 2008,479 2009,513 2010,528 2011,528 2012,530 2013,495 2014,496 2015,496 2016,534 2017,547 2018,556 2019,564 2020,570
SOURCE: Office of Management and Budget