President Barack Obama will propose a $3.99 trillion federal budget Monday that would tax trillions of cash kept offshore by U.S. business and use the proceeds to help finance a massive rebuilding of roads, bridges and mass transit at home.
The proposal to tax offshore accounts to pay for a sweeping infrastructure building plan is among the highlights of a budget proposal Obama will use to urge a fundamental shift of the nation’s wealth, taxing the wealthy to help the poor and middle class who have stagnated even as the economy has rebounded.
“This budget shows what we can do if we invest in America's future and commit to an economy that rewards hard work, generates rising incomes, and allows everyone to share in the prosperity of a growing America,” the budget will say. “It lays out a strategy to strengthen our middle class and help America's hard-working families get ahead in a time of relentless economic and technological change.”
The spending proposal for the fiscal year that starts Oct. 1 includes a litany of spending and tax increases, many of which have been offered in past years but rejected by Congress. This year’s plan is expected to be no different in a newly Republican-controlled Congress, where lawmakers are expected to move forward with their own budget blueprint this spring.
“It seems to be more of the same policies that have resulted in the lowest, slowest economic recovery out of an economic downturn in the history of the country – more taxes, more spending, more borrowing,” House Budget Committee Chair Tom Price, R-Ga. said on FOX News Sunday.
While all but certain to die in Congress, Obama’s blueprint could provide Democrats with a platform in the 2016 elections for the White House and Congress. His proposals would benefit more than 44 million households with an average benefit of $600 per household, according to the White House.
One proposal will be the six-year, $478 billion infrastructure program focused on roads, bridges and transit systems.
About half, $238 billion would come from a one-time 14 percent tax on the roughly $2 trillion that U.S. companies have offshore, senior administration officials said Sunday.
The other half of the money – $240 billion – would come from the federal Highway Trust Fund, which is financed with a gasoline tax.
Finding money to pay for the nation’s crumbling infrastructure has been debated with little success for years. Washington has occasionally debated “tax holidays” to voluntarily repatriate offshore earnings at lower tax rates than the current maximum corporate tax rate of 35 percent. Obama opposes such programs and his plan would be mandatory.
“Republicans believe that we should be building our infrastructure. The question’s how we should pay for it,” Obama said during an interview with NBC before the Super Bowl. “That's a negotiation we should have.”
The fiscal 2016 budget plan will urge Congress to throw out spending caps adopted in 2011, and allow a 7 percent increase in spending that’s not already on autopilot such as Social Security and Medicare,.
He’ll propose increasing military spending by $38 billion, to $561 billion for the coming year.
–The “necessary resources to degrade and ultimately defeat” the Islamic State terrorists in Iraq and Syria;
–Money to provide “political, economic, and military support to NATO allies and partner states in Europe” to push back against Russian aggression;
–$14 billion to “strengthen U.S. cybersecurity defenses and ... more rapidly protect American citizens, systems, and information from cyber threats.”
–$1 billion to promote “prosperity, security and good governance” in Central America.
He also will propose increase domestic spending by $37 billion next year, to $530 billion.
–Free community college for 9 million students;
–$3 billion on science, technology, engineering, and math education;
–$1 billion in additional money for Head Start early childhood programs;
–$100 million to reduce the abuse of prescription opioids and heroin.
He’ll also urge new tax breaks for the middle class, such as a tripling of the child care tax credit. To help pay for his proposed spending and middle class tax cuts, Obama proposes more than $1 trillion in taxes over the next decade.
He is proposing tax increases on the wealthy totaling $320 billion over 10 years, and come atop those levied on the wealthy last year, which will total about $600 billion over the next decade. About $210 billion would come from the higher taxes on the estates and investment income of the wealthy, and $110 billion from fees on finance and Wall Street.
He’s also proposing $640 billion in increases on the wealthy recycled from an earlier plan.
In addition, he will propose closing a tax loophole on corporate jets and eliminating a provision allowing hedge-fund and private-equity profits to be taxed at a lower rate, the officials said.
“The president believes that it’s possible -- and, in fact, I think that he’s proved that it’s possible -- for us to make smart decisions with the budget to make our tax code fairer and more simple, and do it all in a way that’s fiscally responsible,” White House Press Secretary Josh Earnest said Friday.
Republicans have long indicated that changing the tax code is one area where they hope to compromise with the White House.
“We want to work with this administration to see if we can find common ground on certain aspects of tax reform and we want to exhaust that possibility,” Rep. Paul Ryan, R-Wis., chairman of the House Ways and Means Committee, said on NBC's "Meet the Press" on Sunday.
Obama’s plan will say that it would cut projected annual deficits by $1.8 trillion over 10 years. He’ll also say that his blueprint would stabilize the national debt as a percentage of the economy, the start reducing it relative to a growing economy.
“It achieves these goals by replacing mindless austerity with smart reforms,” the budget will say, according to a summary provided to reporters.
However, Obama’s plan relies on tax increases and legislation that are unlikely to get past a Republican Congress.
He assumes, for example, that he’d get $640 billion over 10 years by curbing tax breaks for the wealthy. “These savings come from limiting tax benefits that are not efficient in achieving social goals, raising revenue without raising tax rates,” the budget will say.
He also counts on $400 billion savings in government health programs such as Medicare, and $160 billion savings from a comprehensive overhaul of immigration.
Even with previously approved spending cuts in place, deficits are projected to grow again in a few years, hitting $1.1 trillion in 2025.